Amazon is currently deducting 20% VAT on each sale, and I’m wondering if it’s possible to pay this VAT directly to the UK government every three months instead. After paying 20% to Amazon and another 20% to my supplier, I’m operating at a loss, and it’s really affecting my cash flow. My investment is small, and since VAT returns are quarterly, it’s tough to manage.
I’m not a UK resident, so if anyone else has faced this issue, could you please share how you handled it?
Any advice would be greatly appreciated.
Yes, you can absolutely stop Amazon from deducting 20% VAT on each sale, but only if you register for UK VAT yourself and provide Amazon with your valid UK VAT number. Right now Amazon is charging VAT on your behalf because, as a non-UK seller storing goods in the UK, HMRC requires VAT to be collected unless you have your own VAT registration. That’s why Amazon adds 20% on every sale and remits it directly to HMRC.
Once you register for UK VAT and add your VAT number to Seller Central, Amazon stops adding VAT automatically and you’ll instead charge VAT yourself, file quarterly VAT returns, and reclaim the VAT you paid to suppliers. That’s the normal system UK sellers use to manage cash flow, and it’s the only way to avoid Amazon taking VAT upfront.
Just keep in mind: Amazon does not allow non-resident sellers to avoid VAT registration if they hold stock in the UK, you must either be VAT-registered or accept Amazon deducting VAT automatically. Nearly all overseas sellers eventually register because the automatic deduction destroys margins exactly like you’re experiencing.
So the practical solution is: register for UK VAT, add your VAT number in Seller Central, then file VAT returns every quarter and reclaim your input VAT from suppliers. That’s how you fix the cash-flow issue.