We have just started up a UK ltd company and are making c£3k per month eCommerce (Amazon) sales to UK customers. We’d like to start offering to Europeam customers too via Amazon but getting conflicting advice about whether as a non VAT registered business we can do so. From hmrc guidance we thought that until our total sales (from customers wherever) reached £77k pa we didn’t need to register for VAT. However an Amazon affiliated VAT service company is insisting that any French customer sales would be Distance Sales and must have UK VAT applied. This seems like nonsense to me but looking for corroboration please!!
To have the confidence that your business is being fully compliant with VAT rules and regulations I suggest you contact Terry Dockley who is an expert on the subject. You might have to pay for his advice as this is what he does professionally, but you will get a definitive answer. His email is email@example.com and telephone number is T: 01635 576 298
Or speak to HMRC directly….
under "Corporate and Business"
Also, you should employ a good accountant. It is preventing these sorts of issues and questions that they are worth their weight in gold – if you can find a good one.
I can see you will have a little problem. If you trade with France, you’ll probably double your TO, it is reasonable to assume and get close if not exceed the VAT threshold anyway, and having to charge VAT will mean increasing prices by 20%!!!! That would kill you business if you can’t find a way of reducing your costs. Obviously you can get the VAT back on purchases, but you’ll still be adding something. Good luck.
Hope it helps
Probably the better question for you is, do you expect to hit the VAT registration threshold. It might just be easier to register for VAT now. Otherwise you have a now and then situation, which you’ll have to keep an eye on and update your records with Amazon again.
Whilst its a pain right now, it might be worth doing in the long term. VAT cross borders can be tricky. EU rules are getting tighter. I know we now record the VAT numbers of every cross border company/client we deal with. We have to produce VAT reporting for revenue here in Ireland and if you don’t have a VAT number it raises questions. Having a VAT number certainly improves your EU credibility.
I’d agree with the other posters get HMRC advice on board.