Amazon Reverse VAT Charge - help!
I’ve just had a conversation with HMRC about a reverse charge on VAT needed for Amazon services. They said not many people know about it (even my accountant isn’t sure!) but that I need to start paying it and backdate it. I cannot get my head around what this is and how I calculate this. They’ve sent and explanation but if doesn’t make any sense to me, does anyone have a Layman’s explanation of how to calculate this every period, thanks in advance
20 replies
Seller_esvgLzKXw2YAl
It’s actually not that complicated.
Once you give Amazon your VAT number, they stop putting the VAT on your invoices (Fees).
You then have to account for it on your VAT return.
But basically, it’s treated as a null charge.
That’s it.
Seller_tRuvBEHDedp4q
Basically Amazon do not charge you VAT if you VAT registered.
You have to work out the VAT that would/should have been charged and add it to both Box 1 (VAT Due) and Box 4 (VAT Reclaimed) so they cancel each other out.
So if your fees from Amazon were £1000 you add £200 to both Box 1 and Box 4
Seller_8SyFbOtU5Jy1v
Thank you all so much for taking the time to explain this. They’ve given me a backdated bill so I’ll go back to ask how I reclaim the VAT, hopefully they’ll let me do this in my next return
Seller_VgT1eHAJHfQuv
Whilst the reverse charge will have no effect on the VAT you owe you must account for VAT on the Fees you have paid to Amazon.
Amazon take the payment for the fees direct from your selling account so you never see that money but it is money you have taken as income & must account for in your VAT return as income & allocate the relevant portion to your VAT account & include in your VAT return.
e.g. if your Amazon fees for the month are £1200 then you need to declare VAT of £200 on that.
Seller_DXdNeV8CXfQ6b
Should seek professional advice first of all, however my understanding (Sage accredited so very used to posting these types of Journals)
There are certain codes in the T20+ range specifically for reverse charge VAT, in this case it would be a T24 entry.
T24 Nominal/Control Account Settings:
RATE: 0%
Include in VAT report: YES
REVERSE CHARGE: NO (seems bizarre, but we want this on the VAT return so NO is the correct input)
ENABLE EC CODE: Yes (choose EC Purchases > Services)
LINK TO: Choose T1
Now the T24 is configured, your entries posted using this code (Batch Supplier Invoices for example) do not affect your VAT control accounts, ie there’s no VAT, but when the return is run, the following will happen:
Your NET amounts will be added to boxes 6 and 7
The NOTIONAL VAT AMOUNT (non existing, just a ‘double-entry’) will appear in boxes 1 or 3, and 4, and cancels out the NET, leaving a ‘balance’ on the return as 0.
Again, your Accountant/Bookkeeper should know these things, this is not new and VAT Notice 735 was published in 2015.
EDIT:
Source: Sage 50c 2019 Accreditation Workbooks and exam
