Amazon UK have now taken measures to help VAT evading sellers understand what VAT compliance is and whether they need to register for VAT.
They have teamed up with KPMG who have provided an online “VAT registration litmus test“.
We tested the tool and there seems to be some flaws in it. It doesn’t work for NON EU companies (Chinese) with EU stock as it doesn’t ask where your business is located. It also says that you need to hit the VAT threshold before registering for VAT. There is no VAT threshold for NON EU companies. We find the tool completely confusing to use with a very badly designed results page. Hope KPMG are better accountants than web developers.
Perhaps they should think about renaming it from “VAT registration litmus test” to “VAT registration ambiguity test”!!
We launched our own simple test “Am I committing VAT Fraud in the UK?” several years ago. OK we haven’t spent much on it but it does work for NON EU companies. It’s not rocket science!!
We are very sceptical about the reason why Amazon are now doing this. It’s certainly not because they have a moral conscience for being part of the £7.5billion hole they have caused to the UK economy and online businesses. Amazon are only doing this to protect their own revenues and shareholders.
Is Amazon’s time is numbered? Is the noose tighten around their necks for being part of a fraudulent supply chain? They know the main bulk of their European fulfilment operation is built around dispatching goods for Chinese VAT evaders. Amazon’s bottom line is going to take a major hit once the VAT evaders are shutdown.
The only reason why Amazon have been able to get away with it for so long is because of HMRC’s complete incompetence in shutting this fraud down. We have seen a whole host of new policies and announcements but have seen very little action in actually shutting down these VAT evaders on Amazon & eBay. HMRC needs to up their game.
Lets hope the EU & UK take Amazon to court and make them liable.
Here is the headline that appeared on Amazon Seller central:
New Tool and Resources Page for VAT Information
23 Nov 2016
Selling your products on the UK and other Amazon European Marketplaces can help you grow your business. To set up your business for international success, one of the important considerations to keep in mind is how you manage Value Added Tax (VAT). If you’re selling into an EU country from outside EU, it’s essential to be aware of any potential VAT requirements.
Take the newly launched Litmus Test to assess your VAT registration needs
To make compliance easier, it’s important to know which specific countries you’re selling into, and to have an understanding of their requirements in those countries. The VAT rules for every EU country are different. But there are some basic factors that will help determine whether you will have to register for VAT within a certain country, including:
• Where you are based/established
• From where you ship goods into this country
• Where your customers are based
• Whether your customers are consumers or businesses
• The level of your sales
You have a specific example in mind and don’t know if you need to VAT register or not? Take Litmus test and find out now (https://litmustest.kpmg-vat-compliance.com).
Visit our new VAT resources page to learn more about VAT compliance requirements
There are some precise steps you’ll need to take to register and file your VAT returns. As an example, here’s what someone selling into the United Kingdom would need to do to be compliant:
• Register for VAT
• Charge the correct amount of VAT to UK customers at checkout and issue correct invoices where required
• Submit your VAT returns by the due date
• Pay any VAT due to HMRC
• Keep proper VAT records
This is just an example of the steps required in one country — while the general process is similar elsewhere, you’ll need to have an understanding of each country’s requirements before you start selling to customers located there (and charging them VAT). Visit our VAT resources page (https://services.amazon.co.uk/services/fulfilment-by-amazon/vat-resources.html) to learn more about VAT compliance requirements in the UK.