Hi,
please guide me.
I purchased 500 units from a UK distributor for my UK Amazon account at a cost of £3,750. They are asking for £750 in VAT charges.
They mentioned that we could claim the VAT, but we haven’t registered our company for VAT exemption.
Everyone pays VAT at 20% in the UK (except for zero rated items) so your supplier is correct. You can’t register for VAT-exemption. There is no such thing.
A VAT-registered company can claim the VAT back from the taxman but as you are not registered, you can’t and you need to be sure what prices you are using for your item cost.
Suppliers tend to go with VAT-exclusive prices so 20% is added to the invoice. Going by your example, your item has cost you £9/each.
As you are not VAT-registered, don’t forget that Amazon fees now include VAT so as you can’t claim it back, make sure you have built that into your costings.
Whether you register your company for VAT or not, you will still have to pay input VAT. If you are a non-resident UK seller, you should register your company for VAT. If you are a resident UK seller, it’s better not to register for VAT until your sales reach £90,000. However, in both resident and non-resident cases, you cannot avoid paying input VAT.
You don’t claim VAT back from Amazon. Once you’re VAT registered you’ll be able to claim it back from HMRC. Usually this is deducted when you submit your VAT returns. Please speak to your accountant regarding how VAT works.
You need to speak to your accountant. They’ll help you with VAT registration and explain how VAT works.
The £750 is upfront VAT. The actual VAT is based on your selling price, and you need to pay 20% VAT on your selling fee to HMRC. This £750 upfront VAT will be deducted, and you can claim it back.