Reverse vat on fees
Hi
I am vat registered, uk seller selling to uk companies.
I have given amazon my vat number and im being charged 0 vat.
Im lost with the reverse charge despite my investigatons.
Say i sell an item for £100 amazon charge me 10% fees £10.00 should i be addding vat onto these fees for my calculations 10% fee plus 20% vat on the fee to work out my profit?
Or should i not add any vat, i have to pay 0 vat to amazon and 0 vat to hmrc for amazon fees?
From what i can see, amazon and etsy, no vat is paid to the hmrc or amazon on seller fees.
ebay is however diffferent vat is paid on this at 20%
5 replies
Seller_esvgLzKXw2YAl
First thing you do, is to speak to an accountant. If you don’t have one yet, I would strongly advise that you get one. VAT is the one thing, that you cannot afford to get wrong.
Reverse charge is actually quite simple at the end of the day.
All it means, is that if the company charging you vat is based in the EU, they simply don’t allow for it on the fees that you are charged and pay it at source instead.
You need to account for this on your VAT return.
So that £100 item. Amazon charge you 10% and you actually pay them £10.
That £10 is under the reverse charge scheme. So what is actually happening, is Vat of £2 is charged on it, which you don’t pay and they pay it direct instead.
So on your VAT return, you have to account for this. I can’t remember the specific boxes etc, but they are there.
Be aware, that any advertising invoices will have the vat included, as they are charge via a UK company.
Ebay doesn’t fall under this scheme, as they are a UK company and charge vat directly.
Oh and just to add to the above, when working out your costs and profits etc, you should always work on the vat EXCLUSIVE prices. These are the true figures that you are working with. VAT is simply and input/output that is not important for these.
Seller_SVvTOVbATLneu
Thank you for your reply, that is very very useful information, you mention on working out costs and profits work on exclusive prices, that is simple i add up all costs without including vat.
Then i guess at the end if i want 20% profit, i add 40% on, 20% vat and 20% Profit?
Seller_SVvTOVbATLneu
Yes but govt take 20%
You can reclaim 20% yes, on goods that have vat on them.
But say you buy a juicer for 10.00 plus vat, sell for 20.00 plus vat, if you exclude the vat when you purchased, the profit is still the same as your getting it back so it makes no difference.
Paid £2.00 vat buying it sold for 20.00 inc vat, govt due £2.00
Just no point in including the purchase vat in your calculations as your getting it back anyway, what matters is how much you have to pay hmrc.
