Transferring account VAT implications


#1

Hi

I have been a seller on Amazon for two years now.I have two excellent products.

Unfortunately I do not seem to be making any profit off them as I am based overseas and to be honest been registered for Vat straight away is making it very hard to have any success with this business especially a new business

I was thinking about transferring my account just thinking about it to a UK based company
If this company sees the potential of my account which I can see everything would be great but with paying VAT the profit margins are so low

As of yet I have not broke the 85 thousand threshold to be VAT registered but the fact I am based overseas I still had to register for VAT

My question is If I did transfer the account to this UK based business , since they are based in the UK could they deregister for VAT how would Amazon view this , would there be any issues ,is this possible

Thank you in advance


#2

If the ownership of a UK company is overseas the company would fall within the Non-Established Taxable Person (NETP) regulations, which would mean there isn’t an £85k allowance. This means you’d be in the same situation as currently.

If you’re not making a profit then your business model or pricing is flawed in some way. You need to work out why that is and correct it if possible.


#3

Hi Barry

Thank you for such a quick response

But if the person I transfer the account to has a UK based company and is based in the UK does it not make sense if he or she is getting the account that is under the UK VAT threshold ,he or she because of his or hers UK company can deregister for VAT

Thank you


#4

You can’t effectively sell your account to someone. You could transfer it to a UK company that you’re the director and beneficial owner of - but you wouldn’t be able to deregister from VAT. They might then be able to take over the majority/all of company, and deregister from VAT. This means you would no longer have a substantial stake in the business.


#5

Hi Barry

Thank you for all your help Yes i was just putting the question out there
I love this this business model and would really love to be successful but putting in so much work and barely breaking even is just not sustainable long term

Thanks again


#8

Yes, you simply can’t do what you want to do.
But you really do need to look at the way you are selling.
At the end of the day, VAT is something that everyone will have to get involved with, if they are successful. So to build a business on something that simply cannot cope with VAT, is a losing strategy.
You need to change either your costs, or improve your price.
Your only alternative otherwise, is to sell to someone else, who can then retail the product.
But… if the above is true, then it’s not going to work either.