VAT returns / VAT audit
Hi
I am undergoing a VAT audit with HMRC. The caseworker does not accept the declared figures on several of my VAT returns stating the figures provided by Amazon do not match. I have provided the reports I have from my Seller account, he does not dispute the authenticity.
I am told I have to pay the difference which is a large amount and to dispute this with Amazon. Surely this isn't right? I've had two previous audits before without any issues.
The caseworker had asked Amazon to suspend my Seller account, this will only get reinstated when I pay. I am told I can pay the amount, reinstate my account and appeal later but there is no guarantee I can successfully appeal.
VAT returns / VAT audit
Hi
I am undergoing a VAT audit with HMRC. The caseworker does not accept the declared figures on several of my VAT returns stating the figures provided by Amazon do not match. I have provided the reports I have from my Seller account, he does not dispute the authenticity.
I am told I have to pay the difference which is a large amount and to dispute this with Amazon. Surely this isn't right? I've had two previous audits before without any issues.
The caseworker had asked Amazon to suspend my Seller account, this will only get reinstated when I pay. I am told I can pay the amount, reinstate my account and appeal later but there is no guarantee I can successfully appeal.
27 replies
Seller_0c97IxRRj24VX
I empathise with the situation you are in but this is a technical tax/accountancy matter. I hope your accountant/tax advisor is helping you in this regard. They should be able to understand what the issue is and how to deal with HMRC.
Seller_NbVRNVFKqcciN
Sounds like a scam, honestly. Can you give any more info about the letters without revealing personal info
Seller_uUl6iyAi7hCqa
Are you paying VAT on your actual Amazon sales, or are you paying VAT on the money that lands into your account.
Seller_qn6rbWRTgPiGo
I'm an accountant in the UK and carry out our VAT returns for our Amazon business. May I ask what reports you are using to ascertain your VAT due on sales?
Seller_ae51e0CJoHqCX
It is important to know what figures they are claiming to not match. I assume you also do transactions outside of Amazon so would expect the money being received by HMRC will be checked against your return and figures generated by Amazon.
Tax digital means that probably a lot of checks are carried out and being system generated, discrepancies will arise and this is what will probably trigger the audit.
You state it is quite a large amount but surely a large amount would be pretty obvious to check in any case. Amazon only deal with the inputs of VAT and you deal with the outputs.
There are a few ways to deal with VAT on Amazon but by far the easiest to work out and understanding is generating a date range report every quarter. This would be the information that Amazon would be giving to HMRC in any case. Have you used the date range reports for the submissions? if not then do them over the period that HMRC are querying and you can compare this with the submissions made to HMRC.
If you see a shortfall then you will probably have to give in and accept it. If the figures match then you dispute this.
I don't understand why the HMRC at such an early stage is asking Amazon to suspend your account. Do you do your own submissions and returns or have you used some VAT services company? If HMRC have a problem with your returns then I would have expected them to come at you directly. Also do you have an accountant? If not then I would always recommend that you get an Accountant involved and represent you. They also provide insurances for you take up should there be any queries to cover the cost of such lengthy audits.
Hopefully you haven't been using the cash banked as your figures for declaring to HMRC as this will cause a huge discrepancy since there are a lot of non vatable deductions that come out of this and this does not equate at all to your VAT. A lot of traders make this mistake when starting out but if you have 2 previous clean audits and mentioned reports I would assume this not to be the case.
Seller_IZMia0ASJ6cAm
Do you use Xero or Quickbooks?
We use Xero.
We also use Linkmybooks, which intergrates with Amazon, and Xero or Quickbooks.
Linkmybooks reconciles Amazon transaction and sends an invoice over to Xero, all the transactions and there vat amounts are shown on the invoice, you can then reconcile an Amazon disbursement in your Xero account with the invoice that Linkmybooks has sent to Xero.
You need to make sure the Linkmybooks account is set up right, the customer services are good and will help you with that.
Using this method you could get a robust indication that your previous VAT accounting methods were right or wrong.
Seller_tRuvBEHDedp4q
Very good point.
I am a little suspicious you are on a third audit - HMRC must be suspicious too to do so many even though you say you have passed 2 inspections.
As JR_Wristbands has pointed out - Hopefully you are not using the cash banked/disbursement figures to work out your VAT output? You should be using your total sales figures (including any shipping charges) to work out your VAT output.
e.g. If you sold something at £10 with £2 postage (total £12) and the fee charged by Amazon was £1.80, Amazon would have sent £10.20 to your bank.
If you have used the £10.20 received to work out your VAT output then you would only have paid £1.70 - but you should have paid the VAT on the £12 sales total (i.e. £2)
Times this by 100s orders and there would be a major discrepancy
Seller_iSaQ1YZLh9y3p
Can't you come to agreement with HMRC with a payment plan?
