VAT announcement re: USA seller on FBA -- any notion of how this works?


#1

I am VAT-registered (and registered as a nonresident Importer of Record) in the UK but have no operations there. I sell on Amazon UK solely through the FBA program. Currently, this means that I am filing quarterly VAT returns, and am able to treat the VAT I pay when importing goods to the UK (and for which I receive C79 forms from HMRC) as “input VAT” on the return.

I just received an e-mail from Amazon regarding changes effective January 1, 2021, which states, among other things:

“If you are delivering goods to UK customers from inventory stored in the UK, and your place of establishment is outside of the UK, Amazon will be required to collect and remit the applicable VAT. This will affect both sellers who use FBA in the UK and those who use third-party fulfilment methods.”

This leaves me a bit puzzled. I will continue to have to pay VAT at import on shipments which go to Amazon fulfillment centers. But if Amazon is collecting and remitting the applicable VAT for all of my sales, how on earth do I recover my input VAT payments? Does anyone know? Do I file a quarterly VAT return with no sales, only the inputs from my C79 forms? That seems like it would not be the correct method, but I am at a loss to see what else I could do.

I gather that all of this is a bit preliminary and perhaps nobody actually knows what the answer will be, but it is almost November and so I am hoping some sort of guidance might be available somewhere on it…


#2

Hi
From info in link below it seems the Amazon will collect vat from customer and this will be treated as a zero rated sale from you to Amazon. You will still be able to reclaim vat paid when importing.

https://www.gov.uk/government/publications/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021


#3

Thanks very much, Provoca. That appears to be just what I needed to know. I do find VAT strangely confusing sometimes and will have to remind myself exactly how one reports “zero-rated” transactions but clearly this is the answer.


#4

With business to business sales and orders over £135 treated differently it’s going to make accounting for vat a bit more tricky. Something similar will also apply to eBay sales as well.

I ship to FBA from Ireland so with the UK leaving the EU I will have to deal with input vat and customs for the first time. It’s a lot to prepare for.


#5

It is, indeed, a lot to prepare for. There are a lot of service providers around who can facilitate it, but we really hate to engage a lot of outside services so I’ve always insisted on just learning how it’s done and doing it myself.

I’d think that from the Irish perspective Brexit has got to be more than a little bit frustrating, and I certainly hope that the border situation there remains open. Lovely country you have – I spent a week in Donegal a few years ago and am aching to return, but COVID has put off all plans for the immediate future…