New VAT rules for Flat Rate Scheme
My question is how will the new VAT rules coming into effect in 2021 work with Flat Rate Scheme VAT?
I have been searching everywhere and cannot find a solution. I am a small EU seller in the UK and under Flat Rate Scheme (FRS). FRS is there to make filing VAT easier for small businesses. I am allowed to) reclaim any expenses but I pay a reduced percentage of 7.5% VAT. However, with the new rules, Amazon will start sending 20% directly to HMRC. But Amazon does not differentiate between ordinary and FRS VAT since I keep getting 20% VAT reports.
Does anyone know how the system will work for us the little guys? I seems like Amazon will start sending 20% without the option of reclaiming expenses.
16 replies
Seller_ae1VLIZvWfIGY
Flat Rate is not supported by Amazon, this means that we will have to change to the Standard Rate almost necessarily, these are the words of my accountant. Unless you want Amazon to keep you 20% but this would be a disaster for cash flow
Seller_vz3qfGa9Rhuv0
Hopefully this is an option for people on the flat rate scheme.
Seller_wGoMk1xV9uxHj
I have exactly the same issue. Contacted Amazon but didn’t get a clear answer. I guess this option is for UK established businesses but might be wrong.
I’m just wondering if there are any options that HMRC would return overpaid VAT
Seller_KPedP6XTAv6Ku
Same issue here!
Amazon replied with the following information:
From January 1, 2021, Amazon will be responsible for collecting UK VAT on the following sales of goods delivered to customers in the UK where ordered through any Amazon storefront:
- Goods delivered from inventory stored outside the UK with a shipment value of up to £135; and
- Goods delivered from inventory stored in the UK, irrespective of value, where you, the selling partner, are not established in the UK.
Where either of these supplies take place, Amazon will calculate and collect UK VAT from the customer at checkout and remit this directly to the UK Tax Authorities. You will not receive the UK VAT amount in your disbursements and will not be required to remit these amounts to the UK Tax Authorities.
Please note that the current VAT exemption for sales of goods under £15, where goods are delivered to UK customers from inventory stored outside of the UK, will also be removed from January 1, 2021 – UK VAT will be calculated and collected by Amazon on these sales irrespective of their value.
The UK Flat Rate Scheme remains is not applicable to supplies under this new legislation where Amazon is liable to remit the UK VAT. Amazon will use the normal UK VAT rates for calculating and withholding VAT on these sales. You may want to contact your tax advisor to discuss if any changes are required to your VAT registration with HMRC or the preparation of your VAT returns.
UK VAT on eCommerce legislation: https://sellercentral-europe.amazon.com/gc/vat-education/uk-voec?ref=VATed_ukvoeclp_eu
My business is established outside the UK, so looks like I have to move my business to the UK or start reclaiming VAT under normal scheme… But if you are in the UK you might have a chance to get rid of the automatic collection of VAT by Amazon somehow.
Seller_fX5wR12t3vtLQ
Below is Amazon answer. Do you think that seeing that Amazon is accountable for any vat that a seller doesnt remit, Amazon doesnt want to risk therefore doesnt allow sellers to remit vat by themselves? Is this plausible?
Hello from Amazon Selling Partner Support,
I understand that you would like to remit youself the UK vat to HRMC as you will soon be on the flat scheme.
The UK Flat Rate Scheme is not applicable to supplies under the new UK VAT on E-Commerce (VOEC) legislation. Amazon will use the full UK VAT rates for calculating and withholding VAT on these sales. If you previously used the Flat Rate Scheme, you may want to contact your tax advisor to discuss if any changes are required to your VAT registration with HMRC.
You will find more information t the following link:
https://sellercentral-europe.amazon.com/gc/vat-education/uk-voec?ref=VATed_ukvoeclp_eu
