Home For accounting professionals AAT member discussion (AATQB, MAAT, FMAAT and AAT Licensed Accountants and Bookkeepers)
Current updates regarding coronavirus (Covid-19) and the precautions AAT are taking will be continually updated on the below page.

Please check this link for the latest updates:
We hope you are all safe and well and if you need us we will be here. 💚

Accounting for VAT from Amazon sales... MOVED

ETA MOVED ... Sorry!

I'm looking for some help in accounting for VAT on Amazon sales. I have an invoice which isn't very clear as to what is vatable and what isn't... can any one help with this please?

My logic is (please say if I'm wrong!!) that you pay vat on the total sales/income and don't claim on the Amazon fees as they are based in Luxembourg...

What about the gift wrap/shipping costs? The invoice does split this.

Any help would be much appreciated.


  • villapbvillapb Trusted Regular Registered Posts: 357
    Hi i did 3 vat return for a large Amazon and ebay seller last month.
    I spoke to hmrc to confirm and you use whats called the reverse charge mechanism which sounds fancy but simple really.
    The sales of the products are vatable as normal.
    The services such as gift wrap and charges are non vatable as they are Luxembourg, lucky amazon... ebay using a loop hole.
    But you now use the reverse charge by calculating vat on the amount shown on the Luxembourg invoices for services and charges and put the vat in box 1 (sales) but also reverse it in box 4 (purchases). The net amount is shown in box 6 and box 7 ie sales and purchases, i believe as it seems a pointless exercise that hmrc can track this process and see how much they are losing to amazon but thats only a rumour.........................................
  • villapbvillapb Trusted Regular Registered Posts: 357
    ps the client wont be happy as he loses 20% of the sale to hmrc but still charged the fee on the gross amount ,,,,,double whammy, is £100 product sale give £20 to hmrc but amazon charge 10% so £10 taken ...........£70 goes to client, but overheads are less and traffic to amazon lot more to products. This was a new client for us and he seemed happy enough with vat bill...but still moaned like hell.....he sacked his previous accountant lol........
  • redsunflower25redsunflower25 Feels At Home Registered Posts: 38
    Thanks!! We have been struggling with this... so just so I have got this straight...

    pay vat on all total income (less refunds)

    then post the amazon fees as income (using Sage) T4 then post as an exp with T4 (how else to get in box 1 and 4? brain is melting with this haha)

    What about the sales to EU that are to unregistered customers?

    Would you be able to show me the journal you used to post this please? (obviously without clients info!)

    thank you for replying!
  • redsunflower25redsunflower25 Feels At Home Registered Posts: 38
    sorry forgot to ask... do we not need to show an expense of the fees on the p+l? thanks
  • villapbvillapb Trusted Regular Registered Posts: 357
    I did my returns on excel so was easier to do and highlight etc.
    I treated the fees as income and then cost of sales, but for you to class as expense would do the reverse.
    I had sales for Spain, France etc which are vatable in uk if below the vat threshold of the other country, if over then that's another story.............put vat in box 1 and net in Box 8 (eu sales). using hmrc conversion rates. Again remember client sold £100 product to spain, £80 in box 8, £20 in box 1 after conversion.
    The previous accountant used VT transactions.....but we use excel.
    Ps amazon sales are a bugger to do first time but once you suz it another skill set.
  • villapbvillapb Trusted Regular Registered Posts: 357
    ps yeah income less refunds, i found it easier by looking at product sales, services and fees seperate.........stopped me going potty with all those reports.....
  • redsunflower25redsunflower25 Feels At Home Registered Posts: 38
    I have copied the invoice into excel to see it and do the calc's.

    I saw something online, (think HMRC I've been looking all day) about having to do do a list of the reverse charges, do I need to notify HMRC each time?

    We have sales to EU and worldwide, what do you mean by if below the threshold of the other country? Think I need to do a VAT top up course, I don't seem to know anything! (Our sales are a couple of pounds to a couple of hundred... max)

    For the worldwide do we just have the gross figure in box 1 or do we split the vat, and same question for the EU sales?

    Thank you so much for your help... Sorry for all the questions!
  • villapbvillapb Trusted Regular Registered Posts: 357
    Regards hmrc , no you dont have to notify hmrc, i highlighted mine and presented it so if i got a an inspection i would be able to show the inspector.
    If low sales to eu and worldwide dont worry about thresholds but do show it in the correct box on the return. Also eu and worldwide spilt it as the gross is classed like a sale to a uk customer.
  • villapbvillapb Trusted Regular Registered Posts: 357
    Also what i have said is a retailer selling to private customers and not business to business ...........thats another ball game
  • redsunflower25redsunflower25 Feels At Home Registered Posts: 38
    I opened a new company and have posted my workings, think its right, used sage code T8 and it pulled the Amazon fees into box 2 and 4 (vat only) then it pulled the net into box 7 and 9... please say I'm on the right track?!
Sign In or Register to comment.