What Do UK Amazon & eBay Sellers Need to Know About VAT Compliance?

Introduction

Selling via Amazon and eBay offers significant growth opportunities but VAT compliance can swiftly become complex, especially post‑Brexit. Sellers face changing VAT thresholds, digital filing mandates, new EU systems like OSS and IOSS, and even marketplace‑specific obligations that, if mishandled, can result in blocked listings or fines. This guide presents clear, authoritative guidance tailored for UK online retailers, built around the expertise you’d expect from Veritus Consultancy.

What Is VAT and When Must UK Sellers Register?

Value‑Added Tax (VAT) is an indirect consumption tax imposed on the value added at each stage of the supply chain, ultimately borne by the end consumer. In the UK, the standard rate is 20%, with reduced rates (e.g., 5%) and exemptions (e.g., children’s clothing, food) applying to certain goods and services.

E‑commerce sellers collect VAT on behalf of HMRC, and remit the difference between output VAT (on sales) and input VAT (on purchases).

When must Amazon & eBay sellers register for VAT in the UK?

• UK businesses must register if taxable turnover exceeds £90,000 (raised from £85,000 in April 2024) over a 12-month period.
• Overseas sellers must register for VAT from the first sale if they store goods in the UK or sell directly to UK consumers.
• Using Amazon FBA or storing inventory in the UK triggers immediate VAT obligations even below the threshold.

How Have Brexit and Marketplace Rules Affected VAT Compliance?

What changed post-Brexit for online sellers?

• The UK’s exit from the EU means distance selling thresholds no longer apply to UK–EU trade.
• UK sellers selling into the EU must register locally in each EU country or use OSS/IOSS for simplified cross‑border compliance  
• EORI numbers are now essential for customs and VAT compliance when shipping between UK and EU  

How do Amazon’s and eBay’s VAT responsibilities affect sellers?

• Under Marketplace Facilitator rules, Amazon (and similar platforms) must collect and remit VAT at checkout for consignments valued at £135 or less, VAT is collected and remitted by Amazon/eBay at point of sale,
• However, sellers remain responsible for VAT on sales not covered by these schemes especially when holding stock in EU or UK locations.

What VAT Schemes & Filing Preparations Should UK E-Commerce Sellers Know?

Which VAT schemes may benefit Amazon & eBay sellers?

• Flat Rate Scheme: Pay a single flat percentage of turnover but cannot reclaim input VAT typically suitable for businesses with low input costs.
• Annual Accounting Scheme: Helpful for steady turnover, offering cashflow advantages through advance payments.
• Partial Exemption Scheme: Relevant if your business mixes VAT-exempt and taxable supplies.
• These schemes are available to aid simpler bookkeeping and better planning suitable options differ per business profile.

What are the digital VAT filing requirements?

• Making Tax Digital (MTD) requires all VAT-registered businesses to keep digital records and submit VAT returns via HMRC-approved software (e.g. Xero, QuickBooks).
• Most VAT returns are filed quarterly, though some businesses may opt or be required to file monthly or annually.
• Common errors include missed MTD filings and late payments leading to fines and interest, so attention to deadlines is critical.

What Do UK Sellers Need to Know About Cross-Border VAT and EU Sales?

IOSS streamlines VAT on low-value imports (≤ €150) into the EU. 

OSS enables consolidated VAT reporting across multiple EU countries, eliminating the need for separate country registrations unless you store inventory locally.

What Are the Common VAT Risks and How Can Sellers Avoid Mistakes?

Top VAT Risks:

1. Failing to register in time leading to listing blocks or operational halts (especially with Amazon’s Pan‑EU FBA).
2. Ignoring OSS/IOSS thresholds, resulting in non-compliance penalties or customer disputes.
3. Late or inaccurate MTD filings, attracting HMRC fines and interest.
4. Incorrect VAT reclaim on imports e.g., misclassified HS codes or lost documentation.

Mitigation Strategies:

• Regularly monitor turnover and storage locations.
• Track EU sales to stay under or register for OSS/IOSS as required.
• Use reliable digital accounting tools to manage MTD filings and inventory data.
• Secure professional VAT advice for import reclaim accuracy and audit response.

How Can Veritus Consultancy Support Amazon & eBay Sellers with VAT Compliance?

Veritus Consultancy brings e-commerce VAT expertise to UK online sellers through:

• VAT registration and deregistration in the UK and EU jurisdictions.
• Fully MTD-compliant bookkeeping and VAT filing using digital accounting tools.
• Scheme selection advice (Flat Rate, Annual Accounting, Partial Exemption).
• Cross-border VAT strategy: OSS/IOSS registration, import VAT recovery, EORI guidance.
• Support with VAT disputes, HMRC correspondence, and brokerage liaison.
• A jargon-free, strategic partnership empowering sellers to focus on sales not compliance headaches.

Learn more via Veritus’s VAT and e-commerce expertise pages.

FAQs

1. Do I need to register for VAT if my Amazon UK sales are under £90,000?

Yes if you store goods in the UK, use Amazon FBA, or sell to UK consumers or VAT-registered businesses, VAT registration is mandatory regardless of turnover.

2. Can I use OSS or IOSS if I'm shipping only from the UK?

No. UK is now a “third country”. OSS applies only for intra-EU B2C sales, IOSS applies to low-value goods imported into the EU. You may still need EU VAT registration if shipping, or use UK services for export.

3. What happens if I miss a VAT filing deadline?

Late VAT returns trigger a points-based penalty system (since Jan 2023); fines start from £200 after points accumulate, plus late payment interest at Bank of England base rate + 2.5%

4. How does the Flat Rate Scheme work for marketplace sellers?

Under this scheme, you pay a fixed percentage of VAT-inclusive turnover to HMRC and cannot reclaim input VAT. It simplifies returns but is generally best when your input VAT is low relative to output VAT.

5. Can I reclaim import VAT on Amazon FBA stock?

Yes, if you are VAT-registered and hold a valid C79 import certificate or equivalent customs documentation, you can reclaim import VAT via your VAT return.

Conclusion

Navigating VAT as a UK Amazon or eBay seller demands vigilance, digital preparedness, and a clear grasp of cross-border rules. From identifying VAT registration triggers and managing MTD filing to leveraging OSS/IOSS and protecting your Amazon listings, proactive compliance becomes a strategic advantage not a burden.

Ready to Get VAT-Compliant Without the Headache? Connect with Veritus Consultancy for tailored, jargon-free VAT support designed for e-commerce. From VAT registration to OSS/IOSS, import reclaim to dispute resolution, we help you stay compliant so you can focus on scaling your business.