Hi all,
The change to how VAT is handled from August, I am worried I am paying VAT twice but can’t work out why/how/what to do.
I am VAT registered, but use the flat rate scheme.
So as far as I can tell, Amazon fees are up by 20% (i.e. VAT added), but I pay VAT on gross sales, so have noticed profit margin drop significantly this past couple of months.
Can I reclaim that loss somehow.
Cheers
You pay VAT to the government on your total sales, but you subtract the VAT you’ve already paid on any costs you’ve had—like the product itself, postage, etc.
As you’re on the flat rate, you are not permitted to reclaim any VAT you pay on purchases so the addition of vat on fees is bad for you.
I assume you understand why the vat rate for the flat rate scheme is so much lower than standard vat.
You can’t reclaim the VAT on the flat rate scheme. All you can do is accept the lower margins or depending on turnover consider reducing sales and deregister for VAT altogether.
Or if you have any zero rated sales to the US for example then the standard VAT scheme might be better for you.
Exactly as @AmazonUKForumRefugee and @Dennis say.
Since you’re on the flat-rate scheme, you can’t claim it back.
It’s going to hurt a lot of sellers.
However, if it’s costing you more this way, you definitely need some tax advice and should evaluate whether this is the best scheme for you.
The scheme is designed to simplify tax affairs, but now many businesses are going to be impacted by it.
Sorry.