Referral Fee on VAT?
Hi,
Why we (Sellers) need to pay referral fee to Amazon on collecting VAT from customers on behalf of HMRC?
For example, if a product selling price is GBP 10 (business price), we need to add 20% VAT on top of it. This additional GBP 2 will be collected from customers and will be submitted to HMRC. However, Amazon.co.uk will charge referral fee on VAT inclusive price which is GBP 12 in this example. So technically, we are paying referral fee on GBP 2 VAT as well. And this is completely unfair and killing our margins for no reason.
Can any one here help to avoid this additional unfair referral fee on VAT amount?
Thanks
Referral Fee on VAT?
Hi,
Why we (Sellers) need to pay referral fee to Amazon on collecting VAT from customers on behalf of HMRC?
For example, if a product selling price is GBP 10 (business price), we need to add 20% VAT on top of it. This additional GBP 2 will be collected from customers and will be submitted to HMRC. However, Amazon.co.uk will charge referral fee on VAT inclusive price which is GBP 12 in this example. So technically, we are paying referral fee on GBP 2 VAT as well. And this is completely unfair and killing our margins for no reason.
Can any one here help to avoid this additional unfair referral fee on VAT amount?
Thanks
2 replies
Seller_d8YGbIjNqwFxn
It is the way it works for any VAT registered seller and for any seller where Amazon collect the vat on the sale.
For example I am a VAT registered seller and I pay my referral fees on the full sales amount including VAT.
It is a level playing field everyone is treated the same. It is not unfair and there is no way to avoid it.
Seller_mS10UjVYuuGor
If your argument is based on the VAT of the referral fee element, HMRC will charge Amazon 20% VAT on the referral fee they collect so Amazon just passes that on.
If you're VAT registered you'll reclaim that element and that all of your other VAT qualifying costs against the total VAT you'll pay on the sale of the item.
Some businesses are better off registering for VAT even if their turnover is below the threshold, your accountant can advise if that's the best option for you.
