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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5115
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I have a big trouble with VAT and Amazon payments, I

This answer was rated:

I have a big trouble with VAT and Amazon payments, I will put it in example any help will be appreciated
purchase side
Cost of product (when we purchased) : £80 (ex VAT)
Cost of product (when we purchased) : £96 (inc VAT)
Sales Side
Product Sold on Amazon for : £150 (this includes shipping and VAT)
Amount transferred by Amazon after deducting their fees (15%): £127.50
(This is assuming we have given our VAT number to Amazon)
now the question is
a) on what amount do we pay VAT, £150 or £127.50
The are goods are fulfilled offline, like washing machines etc
Hello and welcome to the site. Thank you for your question.
Your sales price is £150 and thsi is inclusive of VAT.
Your output tax should be based on this sales price (inclusive of VAT).. i.e £125 + VAT at 20% making a total £150.
You have received £127.50 from Amazon .. the difference being their fees and this difference is your expense.
I hope this is helpful and answers your question.
If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.
Customer: replied 2 years ago.
Hi,Thanks for the answer, however my question is then I am paying VAT on the fee that is being charged by Amazon
Thank you for your question.
If you are paying VAT on fee that is being charged by Amazon, this would form part of your VAT input on expenses and the VAT paid is reclaimed in your tax return along with VAT on your purchases..
I hope this is helpful.
Customer: replied 2 years ago.
Hi,Amazon is not charging fee on VAT, my trouble is I seem to be paying VAT on Amazon fee as you can see in the example
the total amount product is sold for: £150
Amazon fee: 22.50
now if I am paying VAT on £150, then I am paying VAT on this £22.50 but I have no way to claim that. I thought it would make sense to take the fee out and then pay VAT
Thank you for your reply.
You are paying VAT on your sales and that is £25.00.
The charge from Amazon at 15% is based on amount receivable inclusive of VAT. You seem to be paying them fee on VAT collected.
This is an expense in your books. If there is no VAT included in this fee charge then the whole charge is a cost to you. You are not paying VAT on this £22.50.
You can't use a figure of £127.50 as your turnover to calculate VAT output, I'm afraid.
It has cost you an extra (25 x 15%) £3.75 in Amazon charges and unless their fee is inclusive of VAT and VAT reclaimable,this is a cost you have to absorb.
I hope this is helpful. and 3 other Tax Specialists are ready to help you