Section 6.3 of VAT Notice 741A - Amazon Advertising Invoices for overseas companies

I’m reaching out to seek your assistance regarding a VAT issue that is severely impacting our business operations and pushing us very close to bankruptcy, impacting our independent UK suppliers in the process.

In December, our Amazon account payouts were disabled due to the UK VAT on e-commerce legislation. Despite being a UK limited company, it was determined that our primary place of establishment is not the UK. We accepted our status as a Non-Established Taxable Person (NETP). This determination triggered a process whereby Amazon became the liable party for VAT on sales since 01/01/2021 instead of us - it is important to note that we had been paying the VAT ourselves all this time, so there was no net loss of VAT being collected and paid.

The result of this was that Amazon issued us with a liability for past VAT since 01/01/2021 and suspended all payouts to us; we then had to claim a matching refund of the VAT we had paid to the HMRC since 01/01/2021; upon receiving these funds we would send them to Amazon; Amazon would then remit these funds to HMRC and the VAT liabilities would be settled; Amazon would then unfreeze our payouts.

We sought professional advice to ensure we followed this process correctly and submitted an error correction to HMRC to rectify our VAT payments since 01/01/2021. During the Error Correction process, HMRC noted that as a NETP we would no longer be able to reclaim the VAT on services in this period, since as a NETP we should be charged VAT based on our place of establishment for services, and deducted these amounts from the agreed VAT refund. This meant that the VAT on Amazon UK Advertising invoices issued to us since 01/01/2021 would not be reclaimable - despite it having been collected and paid by Amazon. HMRC explained that instead we must notify the supplier (Amazon) of our NETP status and they must re-issue the invoices with no VAT and directly issue us a reimbursement for this amount. HMRC have given us a formal letter which does confirm this.

We have opened several cases with Seller Support, tried also to push this through our  Amazon Global Sales Strategic Account Manager, but we just can't find someone willing to help us.

HMRC explained that according to section 6.3 of VAT Notice 741A we are not eligible to claim VAT on services, such as Amazon Advertising, as the place of supply is not the UK but the country where the directors reside. Also they clearly explained that we need to seek reimbursement for the VAT paid from Amazon, and Amazon needs to submit an error correction to HMRC in order to reclaim the refunded amount. Furthermore, Amazon needs to stop charging us VAT on Amazon Advertising Invoices.

I would really appreciate it if someone can help me with this as I just can't find anyone from Amazon willing to help us solve this.

Thanks a lot in advance!