So it’s happened…you’ve hit the £85,000 UK VAT threshold, and now you have to register for VAT! That means sales are on the rise, but now you will give a sixth of your sales turnover to HMRC.
Don’t worry though, it’s not all bad news…
HMRC say in their guidance around VAT registration that you can backdate claims for reclaiming VAT on goods and services paid before your VAT registration.
How to know if you qualify for a refund?
Amazon is responsible for charging VAT on Amazon seller fees -what that means is that before you were VAT registered, you paid 20% VAT on top of your fees. However, in The UK, rules differ from most EU countries. In the UK, you can sell products on Amazon without being VAT registered, as the VAT threshold starts at £85,000.
Under certain circumstances, Amazon has to refund the entire VAT you’ve paid. Firstly, you would have had to pay Amazon seller fees; secondly, you shouldn’t have been VAT registered at the time of paying those fees.
Speak to Amazon first to see if you can get a refund on the VAT paid on your fees while you weren't registered for VAT. Otherwise continue reading...
How far back can I go when reclaiming VAT on Amazon fees?
There’s a time limit for backdating claims for VAT paid before registering for VAT. From your date of registration, the time limit is:
- 4 years for goods you still have, or that were used to make other goods you still have
- 6 months for services
Can I reclaim VAT on Amazon fees?
One of the main ways to take advantage of this is to reclaim VAT on Amazon fees. You can reclaim the VAT you’ve paid on Amazon’s fees in the 6 months prior to when you became VAT registered.
Until you enter your VAT number in Amazon Seller Central, Amazon will be charging you 20% VAT on all of their fees (if you are a UK based company). That means that all of the following fees have 20% VAT on them:
- Amazon Seller Fees and Commissions
- FBA Fees
- Storage Fees
- Advertising Fees
How do I work out how much VAT to reclaim?
On Amazon Seller Central, there is a page called Seller Fee Invoices where you can download all of your historic titles tax invoices. These invoices show the amount of VAT paid on Amazon’s fees and will allow you to work out how much you can reclaim.
For users of Link My Books, since we are already passing your Amazon fee information to Xero or QuickBooks, we can quickly change the tax rate on any fees that were incurred in the 6 months prior to your VAT registration in a few clicks. Get in touch with us at support to arrange this.