I kindly ask for feedback from UK sellers with UK companies. Usually, I have been paying VAT to HMRC over the years after each VAT return. However, in the last few months, Amazon has started charging VAT on their fees, and for my current VAT return, HMRC will need to refund money to me for the very first time.
Yes, Amazon has collected a significant amount of money in advance after changing their policy.
I’m wondering if this might trigger something with HMRC. In the same VAT return in 2023, I paid a four-digit amount to HMRC, but now they need to pay a four-digit amount to me. This is a weird and significant change in the pattern. I hope my post makes sense.
It is possible that it might trigger something but this is something you have to accept. If you are doing everything correctly and have suitable records, you have nothing to worry about.
But the amount of VAT charged on fees should be significantly less that what you are paying for VAT on your sales so the change will be minor.
Remember that Amazon and other marketplaces report your sales to HMRC so nothing should be a surprise to them.
You might have a compliance check as I experienced recently for a VAT claim that they owed me but I was told by them that it’s ‘random’ which I think is bull shit !
But they asked to see my accounts for the VAT I had claimed back and also 3 largest invoices that I had claimed VAT on.
HMRC have a goal of auditing every company at least once, but I can assure you this is not the reality. They just don’t have the bandwidth to get around to everyone so they prioritise companies who are claiming vat refunds first and audit a certain percentage of companies at random.
Set up your business operations where you retain the highest percentage of invoices possible (100% is not always achievable), keep your banking clean with only business transactions and let the accountant do the rest.
If you claim vat refunds and have all your paper work in place, you honestly have nothing to worry about if you get investigated. They’re quite nice people (usually) and it’s yours and the accountants job to satisfy them.