Last night I was on Times Radio with Rick Kelsey discussing VAT on Amazon sales and how their overzealous checks have caused hardship to genuine UK businesses (link below, on at 1hr 38m).

In brief, after 1 January 2021 Amazon (and other online marketplaces) are required to charge and remit VAT to HMRC for overseas traders on goods supplied to UK customers. This followed years of widespread non-compliance with VAT for overseas sellers as it was almost impossible for HMRC to pursue overseas sellers – often based in China – for uncollected VAT.

Amazon does not need to remit VAT to HMRC for goods sold to UK customers by UK sellers. The VAT (if due) would be paid by the UK sellers.

A number of foreign traders have registered UK companies (which is currently frightening easy to do) and fraudulently pretended they are UK businesses so that Amazon does not pay the VAT on their behalf.

To stop this, Amazon has requested huge amounts of documentation from sellers to prove they are UK businesses. And genuine UK businesses have been caught in the cross fire. Amazon are freezing sellers funds where this documentation is seen as insufficient and reports are that further documentation is not being processed in a timely manner.

This has meant for some Amazon sellers there has been massive cash flow issues, and indeed VAT has been due on sales where they have yet to receive the cash. Enterprise Minister Kevin Hollinrake has written to Amazon demanding swift action.

https://www.thetimes.co.uk/radio/show/20240226-26408/2024-02-26