PLEASE READ - AMAZON OWNS US THOUSANDS - VAT Calculation Service activated
Please tell me if I’m wrong. - also I do understand that it was completely our fault that we have not found that error sooner.
In November 2017 we have signed up for the VAT Calculation Service. My understanding was that amazon will display the vat inclusive and exclusive prices on our listings , plus they will provide the byer with the invoice , we will be downloading the reports , doing our monthly statements paying vat to hmrc etc. - great ,nothing complicated so we went with it.
We’re a small company , making around 20.000gbp turnover monthly (amazon is only one of our selling channels) , we do have a person coming here every three months , doing books and preping for the VAT return to be sent to our accountant. ( we were in process of changing the accountant for past couple of months , and probably this was why we have not found the error sooner.)
Everything looked fine , but I was surprised that the costs of selling via amazon were sky high. I started to dig , to check what was costing us so much. What I found almost got me a heart attack. I was looking at the csv files with the monthly statements , you all probably know them very well. In the “product sales” field you should see a total gross amount paid for the product , than you do have your postage credits , fees , etc , after that you do get a net amount and vat from that amount. Example:
Product sales £10
fee lets make it 15% - £1.5
postage - £0
NET - £8.33
VAT - £1.67
AMAZON PAYS YOU 8.5 , (from that you are paying £1.67 VAT = £6.83 stays in your pocket.)
Now please have a look at my statement:
Product sales £8.33
fee lets make it 15% - £1.5
NET - £6.94
VAT - £1.39
AMAZON PAYS YOU 6.83 , (from that you are paying £1.39 VAT = £5.44 stays in your pocket.)
Can you see the difference ? Amazon was only paying us the VAT exclusive amount not the gross amount , the fees were taken from the gross amount so they were covered 
and we have paid some funny figure of VAT to hmrc which is completely wrong. I have not found that error before as all the pdf payments statements were showing proper amounts transferred only those amounts were calculated incorrectly.
This was happening for past 5 months now.
I have disabled the VAT Calculation Service today , as everything was correct before we went with it , and contacted amazon regarding it.
If anyone is using the service please have a look at your statements.
also please feel free to explain the issue to me , as I might be missing something ?
22 replies
Seller_EHYOwAkoZV3Hb
I don’t use the vat calculation service at the moment but I am absolutely sure that you are misreading the numbers.
There is no way that you are being paid the vat exclusive price. Switching on the service won’t have changed anything unless you are selling internationally when some B2B sales will be made without vat and you need to be aware of that. Also Channel Islands sales will be vat free.
Check again but someone more switched will come and explain it if you don’t work it out.
Seller_8HUMp1xBsGh2j
I’m not sure if you are looking at one of the reports or where your figures are coming from but the transaction report doesn’t show VAT on sales, just the vat exclusive amount.
Use the VAT Transactions Report (there is a link under tax documents soemwhere) and you should see everything, exclusive amounts, VAT amounts and inclusive amounts.
It looks to me like you are starting with the vat exclusive amount, when we turned on the VAT calc service, all of a sudden our figures were ex-VAT whereas previously they’d been reported inc-VAT.
Seller_pRtZKnwFtS3PQ
Hi,
If you click on a recent order in Amazon and then click on the total amount of the order next to the text ‘sales proceeds’ you will see the figures calculated for that order and you will see that they are correct. Simple quick way of checking this sort of stuff.
Seller_D1UX2SjTuiZtS
The Amazon vat calculation service shows you your sales net of VAT. It does not actually show how much you have received. Below is an example of one of my sales. When i do my reports i add the VAT back. If you look up a transaction manually you will see the amount received is higher than the net price showed on the sales reports.
Price: £27.78
Tax: £5.56
Shipping: £0.00
Amazon fees: -£5.00
Your earnings: £28.34
Seller_ORSX1h27HiEvy
Thank you all for your input.
After spending another half of the day checking everything , it looks like all the transfers were made fine , Amazon VAT Transactions Report were correct , the only issue is with the “DATE RANGE REPORTS”
Those are completely wrong after activating the VAT CALCULATION SERVICE - showing the net and gross values from the VAT exclusive prices , making a big mess .
So if anyone was doing your books using the date range reports , please fix them as you will end up like us.
Again thank you for all your help. Take care.
Seller_yRe2w06RtSrqf
Just to add, Amazon actually adds VAT to any charge displayed. For example they add VAT to their selling fees. So a 15% referral fee is actually 18% referral fee. Also if you are advertising, the costs per click exclude VAT, along with lightning deals.
It would be much more helpful if they were transparent about these things. Unfortunately you dont realise how expensive it is to sell on here until you still looking close at the reports.
Seller_HNAfOHmB0ft30
I’m going to deactivate VAT calculation service until it’s more bedded in as i calculate using date range reports also. Just more headaches to deal with.
Seller_5ia3Q2YxXVCxe
OH GREAT. Did that change then? I’m pretty sure the date range reports were gross at one stage. I’ve just checked first quarter this financial year, and they most certainly are NET - which means my VAT calcs are out. Ho hum. Seeing the Accountant next week anyway, so will sort this mess out. Looks like i’m doing better than I thought!
THANK YOU for bringing this up
just to Recap, if you are signed up to the Amazon VAT service Date Range Reports show NET prices (edited for clarity)
Seller_Q98K0mOszfJtc
I am struggling with same problem - I use the custom generated reports to reconcile income to the statement -
Since activating the service we have been paid the net value of the sale only less fees.
Have i overlooked anything or is it simply that Amazon has not passed on the VAT element of the sale?
I raised a case but several weeks have passed but to date i have not received an explanation.
Service now deactivated.
We are now at the end of financial year and VAT quarter any guidance would be appreciated.
Many thanks
Helen
Seller_ORSX1h27HiEvy
Please have a look at you transfers from amazon - those should correct - you just need to stop using the reports after you have activated the vat invoicing service - as it is no longer showing the correct values.
You need to download the VAT report from amazon - Its massively complicated so you will need some time to learn what to look for - and use those instead.
