In the recent 2016 Budget the UK government has announced that it will now legislate to:
- Have strengthened powers to direct overseas businesses to appoint a UK “VAT representative” to be responsible for VAT compliance and to enforce security for VAT debts. Such VAT representatives are likely to require financial indemnities or bank guarantees before taking on such onerous financial obligations on behalf of the overseas business.
- Hold online marketplaces (e.g. Amazon, eBay) jointly and severally liable for the unpaid VAT debts of an overseas business which sells goods in the UK via that online marketplace’s website.
As a result online market places such as Amazon will have no other option but to close the accounts of non-compliant FBA sellers if they do not register for VAT and start filing VAT returns. The place of supply of goods for VAT purposes is the location of the goods when sold, shipped or “allocated” to the customer. Therefore if the goods are located in Amazon’s warehouse in the UK (or in France, Germany, Italy or Spain), the VAT of the relevant EU country must be charged for deliveries.
RKG Consulting has solutions for VAT registration, VAT return filing and VAT compliance on behalf of Amazon FBA sellers. Please contact us to learn more about how to become VAT-compliant.