VAT APPLICABLE ON GROSS SALE OR NET SALE?
Dear Sellers
Does anyone know that flat rate VAT is applicable on Gross sale or Net sale?
Example
Selling price (Gross ) Sale £13.99
Fba and seller fee £5.09
Vat charged by amazon £1.02 Total =£6.11
Net sale sale received in the bank £7.88
So If I decide to register vat on flat rate , Will I have to pay vat on £13.99 or £7.88?
Looking forward for any help.
Thank you
9 replies
Seller_76AUwmqvSyRIM
VAT is always payable on the gross sale value, including p&p, whichever scheme you choose.
Seller_h44DwAVaFVB1W
Thank you for your comment.
Does that mean the vat on amazon services ( FBA /SELLER FEE will be charged at 27.5 % in practical if I register for 7.5 % flat rate?
Seller_76AUwmqvSyRIM
I am not an accountant so take anything I say with caution.
If you register for Flat Rate Scheme, your selling prices should include 7.5% of VAT and you will need to pay that to HMRC.
Items you buy (eg your inventory) and services you purchase (eg Amazon fees) will be charged at whatever rate those companies are registered at. Most likely 20%. You will not be able to reclaim this VAT as the FRS does not allow this.
So, while FRS sounds attractive because it's a lower rate, the fact that you cannot reclaim VAT paid by you may make it less attractive. FRS suits many companies but not all.
Seller_fMsCVAHNu4txH
Figures Made Up and Simplified for Ease of Example....
Standard Rate (20%)
- Selling Price: £24.00 (£20 + VAT of £4.00)
- Total Amazon Fees: £8.00 (Includes VAT of £1.33)
- Purchase Price: £10.00 (Includes VAT of £1.67)
- VAT Due: £4.00 - £1.33 - £1.67 = £1 to HMRC
- Pre-Tax Profit: £5.00
Flat Rate (7.5%)
- Selling Price: £24.00 (£22.33 + VAT of £1.67)
- Total Amazon Fees: £8.00 (Includes VAT of £1.33)
- Purchase Price: £10.00 (Includes VAT of £1.67)
- VAT Due: £1.67 (Because you can't claim anything back)
- Pre-Tax Profit: £4.33 (14% Less)
If you're dealing with anything that is not VAT rated then FRS can be a benefit but, if everyone in your supply chain is also VAT registered, then you're potentially worse off financially (although it might still make it notionally simpler to do your accounts).
Seller_uc0xZm2BVUBaz
It is always applicable on the Gross sale so £13.99 in this case. You will have to account for and pay the difference from what you received and what the item sold for when submitting your VAT return.
Seller_DfMOm9tgJKAex
vat is charged on the total amount the customer is charged, goods and postage
Roberto_Amazon
@Seller_h44DwAVaFVB1W Hello there! Just wanted to follow on your post as I see a lot of members have stepped in and provided you guidance on this topic.
Thank you specially to @Seller_fMsCVAHNu4txH for the simplified example.
VAT APPLICABLE ON GROSS SALE OR NET SALE?
Dear Sellers
Does anyone know that flat rate VAT is applicable on Gross sale or Net sale?
Example
Selling price (Gross ) Sale £13.99
Fba and seller fee £5.09
Vat charged by amazon £1.02 Total =£6.11
Net sale sale received in the bank £7.88
So If I decide to register vat on flat rate , Will I have to pay vat on £13.99 or £7.88?
Looking forward for any help.
Thank you
VAT APPLICABLE ON GROSS SALE OR NET SALE?
Dear Sellers
Does anyone know that flat rate VAT is applicable on Gross sale or Net sale?
Example
Selling price (Gross ) Sale £13.99
Fba and seller fee £5.09
Vat charged by amazon £1.02 Total =£6.11
Net sale sale received in the bank £7.88
So If I decide to register vat on flat rate , Will I have to pay vat on £13.99 or £7.88?
Looking forward for any help.
Thank you
9 replies
9 replies
Seller_76AUwmqvSyRIM
VAT is always payable on the gross sale value, including p&p, whichever scheme you choose.
Seller_h44DwAVaFVB1W
Thank you for your comment.
Does that mean the vat on amazon services ( FBA /SELLER FEE will be charged at 27.5 % in practical if I register for 7.5 % flat rate?
Seller_76AUwmqvSyRIM
I am not an accountant so take anything I say with caution.
If you register for Flat Rate Scheme, your selling prices should include 7.5% of VAT and you will need to pay that to HMRC.
Items you buy (eg your inventory) and services you purchase (eg Amazon fees) will be charged at whatever rate those companies are registered at. Most likely 20%. You will not be able to reclaim this VAT as the FRS does not allow this.
So, while FRS sounds attractive because it's a lower rate, the fact that you cannot reclaim VAT paid by you may make it less attractive. FRS suits many companies but not all.
Seller_fMsCVAHNu4txH
Figures Made Up and Simplified for Ease of Example....
Standard Rate (20%)
- Selling Price: £24.00 (£20 + VAT of £4.00)
- Total Amazon Fees: £8.00 (Includes VAT of £1.33)
- Purchase Price: £10.00 (Includes VAT of £1.67)
- VAT Due: £4.00 - £1.33 - £1.67 = £1 to HMRC
- Pre-Tax Profit: £5.00
Flat Rate (7.5%)
- Selling Price: £24.00 (£22.33 + VAT of £1.67)
- Total Amazon Fees: £8.00 (Includes VAT of £1.33)
- Purchase Price: £10.00 (Includes VAT of £1.67)
- VAT Due: £1.67 (Because you can't claim anything back)
- Pre-Tax Profit: £4.33 (14% Less)
If you're dealing with anything that is not VAT rated then FRS can be a benefit but, if everyone in your supply chain is also VAT registered, then you're potentially worse off financially (although it might still make it notionally simpler to do your accounts).
Seller_uc0xZm2BVUBaz
It is always applicable on the Gross sale so £13.99 in this case. You will have to account for and pay the difference from what you received and what the item sold for when submitting your VAT return.
Seller_DfMOm9tgJKAex
vat is charged on the total amount the customer is charged, goods and postage
Roberto_Amazon
@Seller_h44DwAVaFVB1W Hello there! Just wanted to follow on your post as I see a lot of members have stepped in and provided you guidance on this topic.
Thank you specially to @Seller_fMsCVAHNu4txH for the simplified example.
Seller_76AUwmqvSyRIM
VAT is always payable on the gross sale value, including p&p, whichever scheme you choose.
Seller_76AUwmqvSyRIM
VAT is always payable on the gross sale value, including p&p, whichever scheme you choose.
Seller_h44DwAVaFVB1W
Thank you for your comment.
Does that mean the vat on amazon services ( FBA /SELLER FEE will be charged at 27.5 % in practical if I register for 7.5 % flat rate?
Seller_h44DwAVaFVB1W
Thank you for your comment.
Does that mean the vat on amazon services ( FBA /SELLER FEE will be charged at 27.5 % in practical if I register for 7.5 % flat rate?
Seller_76AUwmqvSyRIM
I am not an accountant so take anything I say with caution.
If you register for Flat Rate Scheme, your selling prices should include 7.5% of VAT and you will need to pay that to HMRC.
Items you buy (eg your inventory) and services you purchase (eg Amazon fees) will be charged at whatever rate those companies are registered at. Most likely 20%. You will not be able to reclaim this VAT as the FRS does not allow this.
So, while FRS sounds attractive because it's a lower rate, the fact that you cannot reclaim VAT paid by you may make it less attractive. FRS suits many companies but not all.
Seller_76AUwmqvSyRIM
I am not an accountant so take anything I say with caution.
If you register for Flat Rate Scheme, your selling prices should include 7.5% of VAT and you will need to pay that to HMRC.
Items you buy (eg your inventory) and services you purchase (eg Amazon fees) will be charged at whatever rate those companies are registered at. Most likely 20%. You will not be able to reclaim this VAT as the FRS does not allow this.
So, while FRS sounds attractive because it's a lower rate, the fact that you cannot reclaim VAT paid by you may make it less attractive. FRS suits many companies but not all.
Seller_fMsCVAHNu4txH
Figures Made Up and Simplified for Ease of Example....
Standard Rate (20%)
- Selling Price: £24.00 (£20 + VAT of £4.00)
- Total Amazon Fees: £8.00 (Includes VAT of £1.33)
- Purchase Price: £10.00 (Includes VAT of £1.67)
- VAT Due: £4.00 - £1.33 - £1.67 = £1 to HMRC
- Pre-Tax Profit: £5.00
Flat Rate (7.5%)
- Selling Price: £24.00 (£22.33 + VAT of £1.67)
- Total Amazon Fees: £8.00 (Includes VAT of £1.33)
- Purchase Price: £10.00 (Includes VAT of £1.67)
- VAT Due: £1.67 (Because you can't claim anything back)
- Pre-Tax Profit: £4.33 (14% Less)
If you're dealing with anything that is not VAT rated then FRS can be a benefit but, if everyone in your supply chain is also VAT registered, then you're potentially worse off financially (although it might still make it notionally simpler to do your accounts).
Seller_fMsCVAHNu4txH
Figures Made Up and Simplified for Ease of Example....
Standard Rate (20%)
- Selling Price: £24.00 (£20 + VAT of £4.00)
- Total Amazon Fees: £8.00 (Includes VAT of £1.33)
- Purchase Price: £10.00 (Includes VAT of £1.67)
- VAT Due: £4.00 - £1.33 - £1.67 = £1 to HMRC
- Pre-Tax Profit: £5.00
Flat Rate (7.5%)
- Selling Price: £24.00 (£22.33 + VAT of £1.67)
- Total Amazon Fees: £8.00 (Includes VAT of £1.33)
- Purchase Price: £10.00 (Includes VAT of £1.67)
- VAT Due: £1.67 (Because you can't claim anything back)
- Pre-Tax Profit: £4.33 (14% Less)
If you're dealing with anything that is not VAT rated then FRS can be a benefit but, if everyone in your supply chain is also VAT registered, then you're potentially worse off financially (although it might still make it notionally simpler to do your accounts).
Seller_uc0xZm2BVUBaz
It is always applicable on the Gross sale so £13.99 in this case. You will have to account for and pay the difference from what you received and what the item sold for when submitting your VAT return.
Seller_uc0xZm2BVUBaz
It is always applicable on the Gross sale so £13.99 in this case. You will have to account for and pay the difference from what you received and what the item sold for when submitting your VAT return.
Seller_DfMOm9tgJKAex
vat is charged on the total amount the customer is charged, goods and postage
Seller_DfMOm9tgJKAex
vat is charged on the total amount the customer is charged, goods and postage
Roberto_Amazon
@Seller_h44DwAVaFVB1W Hello there! Just wanted to follow on your post as I see a lot of members have stepped in and provided you guidance on this topic.
Thank you specially to @Seller_fMsCVAHNu4txH for the simplified example.
Roberto_Amazon
@Seller_h44DwAVaFVB1W Hello there! Just wanted to follow on your post as I see a lot of members have stepped in and provided you guidance on this topic.
Thank you specially to @Seller_fMsCVAHNu4txH for the simplified example.
