UK Post Brexit VAT for Amazon and eBay E-Commerce Sellers

***DISCLAIMER***
The team at Link My Books are happy to provide users with technical assistance in applying tax rules to their Link My Books setup.  We are not Tax Advisors and so our advice and suggestions on the application of tax rules cannot be construed as tax advice.  We highly recommend that users seek advice from qualified accountants for their tax compliance.

UK Post Brexit VAT for Amazon and eBay E-Commerce Sellers

On 31/12/2020 the transition period following the UK leaving the EU ended. With this, two new rules for UK VAT were brought in.

Firstly, Sales delivered to EU customers, from Great Britain, will be considered as exports and Zero Rated for UK VAT.

These sales are now exports and treated the same as sales going outside the EU prior to Brexit in terms of UK VAT.

Source: HMRC Guidance

Secondly, Amazon (and other Online Marketplaces like eBay) will start collecting and remitting UK VAT on sales which are:

a) delivered to UK customers from outside the UK with a value of up to £135 or;

b) delivered to UK customers from the UK, where the seller is not a UK business.

*”from” refers to where the inventory was shipped from, not the marketplace the sale occurred on.

Sources: Amazon Guidance & HMRC Guidance

How does this affect me?

Any sales to EU customers that are dispatched from GB are now classed as exports for UK VAT purposes and as such may be Zero Rated.

Also, Amazon and eBay will now be reporting sales as either the seller being responsible for calculating and filing UK VAT or themselves (the online marketplace) being responsible.

As such, you will only need to calculate and file UK VAT on sales where you, the seller, are responsible for doing so.

Any sales where the online marketplace is responsible for the VAT may be classed as Zero Rated supplies for UK VAT purposes.
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Ex

Examples...

‍Example 1:

Sale from GB to GB where the Marketplace (Amazon) is responsible for UK VAT.

Seller is a non-UK business.
£12.00 order value.

£10.00 net amount paid to seller.
£2.00 VAT held onto by Amazon and remitted to HMRC.

Seller records £10.00 net amount as a Zero Rated goods supply.
Seller does not remit any VAT to HMRC.

Example 2:
Sale from EU to GB where the Marketplace (Amazon) is responsible for UK VAT.

Seller is a UK business.
£12.00 order value.

£10.00 net amount paid to seller.
£2.00 VAT held onto by Amazon and remitted to HMRC.

Seller records £10.00 net amount as a Zero Rated goods supply.
Seller does not remit any VAT to HMRC.

Example 3:

Sale from GB to GB where the Seller is responsible for UK VAT.

Seller is a UK business.
£12.00 order value.

£12.00 gross amount paid to seller.

Seller records £12.00 gross amount as a Standard Rated goods supply (tax inclusive).
VAT is calculated as £12.00 / 1.2 x 0.2 = £2.00
Seller remits £2.00 VAT to HMRC.

Example 4:

Sale from GB to EU.

Seller is a UK business.
£12.00 order value.

£12.00 amount paid to seller.

Seller records £12.00 amount as a Zero Rated goods supply (for UK VAT purposes).
VAT may be payable to the EU country and will need to be calculated separately.
Any VAT paid to the EU will need to be accounted for, backing the amount out of the sales account.

Example 5:

Sale from EU to EU.

Seller is a UK business.
£12.00 order value.

£12.00 amount paid to seller.

Seller records £12.00 amount as a Zero Rated goods supply (for UK VAT purposes).
VAT may be payable to the EU country and will need to be calculated separately.
Any VAT paid to the EU will need to be accounted for, backing the amount out of the sales account.

How does Link My Books help me with this?

Link My Books integrates directly with Amazon Seller Central, eBay Managed Payments and Xero or QuickBooks. Each time you receive a payout from Amazon or eBay we automatically pull in all the sales data and VAT information from Amazon and eBay. We then create easy to understand summary invoices for each payout. This means with just one click in Xero or QuickBooks you can match up the payment received into the bank with the invoice we created.

Each payout is fully broken down to ensure that all sales, fees and VAT are accounted for correctly.

Link My Books works both sides of the Brexit completion date (31/12/20) and out guided setup wizard helps you to set up which accounts and tax rates you want to use. Most users report it takes less than 15 minutes to set up whilst it saves them 6+ hours each month in bookkeeping.

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For transactions that occurred up to and including 31/12/20 we:

- Separate all sales revenue into Pre-Brexit tax jurisdiction groups
- Apply your chosen Pre-Brexit tax rates for each group

For transactions that occurred after 31/12/20 we:

- Separate all sales revenue into Post-Brexit tax jurisdiction groups

- Separate out sales revenue where the Marketplace is responsible for VAT

- Apply your chosen Post-Brexit tax rates for each group

This means that if you join Link My Books in 2021 but you need to import some historical data from 2020, we have you covered.

You can rest assured that any data from 2020 will be grouped and have your Pre-Brexit tax rates applied and data from 2021 will be grouped separately and have your Post-Brexit tax rates applied.

Not only that but we will take care of separating out any sales revenue where the marketplace is responsible for collecting and remitting VAT to HMRC too, so you don’t need to worry about that either.

How do I get started with Link My Books

Find out more about how much time (and potential unnecessary overpaid VAT) Link My Books can save you at https://linkmybooks.com/.

There you can read glowing testimonials from our customers and start your 14-day free trial.

If you have any questions about this post then please contact support@linkmybooks.com

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