Amazon UK sellers using VAT Flat Rate Scheme
I have a quick question around the VAT FRS:
a) I understand that purchases will not include VAT - but factor reverse charge instead - correct?
b) At the time of filing VAT, I will pay the flat rat on the overall sale price. Do I also need to pay the reverse charge for the purchase?
The cause of this confusion are the following FRS guidance / statements from HMRC:
- cannot reclaim the VAT on your purchases (except for certain capital assets over £2,000)
- Flat Rate Scheme users who receive reverse charge supplies will have to account for the VAT due to HMRC and recover it at the same time on the same VAT Return.
References:
- https://www.gov.uk/vat-flat-rate-scheme#:~:text=you%20cannot%20reclaim%20the%20VAT%20on%20your%20purchases%20-%20except%20for%20certain%20capital%20assets%20over%20£2%2C000
- https://www.gov.uk/guidance/vat-reverse-charge-technical-guide#:~:text=Flat%20Rate%20Scheme%20users%20who%20receive%20reverse%20charge%20supplies%20will%20have%20to%20account%20for%20the%20VAT%20due%20to%20HMRC%20and%20recover%20it%20at%20the%20same%20time%20on%20the%20same%20VAT%20Return.
6 replies
Seller_7VbclcPFFRTnc
If you mean purchase of stock and supplies from uk suppliers , no they are not reverse charged
No vat can be reclaimed from uk purchase of stock and supplies unless capital purchases over £2k)
Amazon seller fee invoices are reverse charged (but only the ones invoiced from .lu , so not advertising)
Are you filing your own vat returns or do you have an accountant ?
Seller_ae51e0CJoHqCX
I’m not following this about purchases as for the calculation of VAT FRS, the purchases are irrelevant, you pay the flat rate percentage purely on turnover without taking into account deductions like you do when you calculate regular VAT.
My understanding is that you cannot claim back any VAT for supplies or purchases. As for the reverse scheme, HMRC are saying you have to pay the reverse charge back so you don’t benefit twice from having the reverse charge in place. In other words you reverse the charge and you must pass the reverse benefit back to them.
The spirit of the flat rate scheme is not there to save money or give a tax advantage. It is for simplification so you just give them your turnover without reclaims and pay a smaller percentage on it.
Seller_tRuvBEHDedp4q
If you were standard rated for VAT then for on a reverse charge invoice you calculate what VAT should have been charged then add that amount to both the VAT due and VAT claimed boxes so they cancel each other out.
So If Amazon fees were £50 you would add £10 to VAT due box and £10 to VAT reclaimed box and there is no VAT to actually pay.
Now I assume from
That a flat rate user does exactly the same thing - at least that is my understanding
However, if you are registered for VAT then by now your should be doing your VAT returns digitally using a compatible accounting package. You enter the Amazon invoice as a reverse charge invoice and it will calculate the VAT and fill in the boxes correctly for you.
