On-line traders must register for VAT

Recently E-Bay had to suspend the account of a trader which clocked up sales of over £1 million without registering for VAT.  If you are selling on E-Bay, Amazon or other e-commerce platforms you still have the obligation to charge VAT if your turnover exceeds the VAT registration threshold.  You will also have to register for income tax also.  For VAT purposes if the goods you are selling are in the UK at the time of supply, then VAT is chargeable.

Once you are VAT-registered you will have to apply VAT to your sales but you can deduct VAT on your business expenses.  You will also be eligible to deduct the expenses and overheads of running the business against your income.  You will pay income tax on the difference.  If you supply your VAT number to e-bay / Amazon it is possible you will not be charged VAT on your listing fees is the supply of this service is cross-border.

If you are supplying services across EU borders then keeping an EC Sales List is now a statutory requirement just like that for goods which include Intrastat obligations. If you are shipping goods from the UK to other EU countries then the VAT Distance Selling provisions also come into play as member states may have distance selling thresholds.

If you do not observe these legal requirements remember HMRC have a surveillance unit – they may be watching you!