I have had a query from a business in Sweden.
They are about to start selling on Amazon in the UK. They will be using the fulfillment by Amazon option which means the goods will be stored in a UK Amazon Warehouse until sold.
Because the goods are held in the UK at the time of supply they must register for VAT. However my question is do they register for VAT as a distance seller using the VAT 1a form or do they simply register online like all other businesses?
Thanks for your help in advance
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It's a distance sale registration since the business is registered in another EU country.
Are we sure that this is correct?
According to the HMRC website to be a distance seller you must be in another EU country (Yes) but also be responsible to deliver goods or arrange for delivery.
https://www.gov.uk/guidance/vat-what-to-do-if-youre-an-overseas-business...
But if they use fulfillment by Amazon - then the goods are held in a UK warehouse and Amazon is responsible for delivery of the goods and not the business?
So do they meet the definition of a distance seller?
Sorry for my confusion but I just wanted to check
Thanks
It's a distance sale if it meets the conditions stated in s.7(4) VATA 1994. If a Swedish business makes a taxable supply of goods to a consumer (B2C) based in the UK then it's a distance sale. The fact that Amazon does the delivery means that they are merely acting as the agent of the supplier who ultimately remains responsible for the delivery.
Threshold
Won't the £70,000 Distance Selling Threshold apply?
(See https://www.gov.uk/guidance/vat-what-to-do-if-youre-an-overseas-business...)
Appreciate that in this case registration in the UK would be preferred as our VAT Rate is lower.
How is it a Distance Sale?
The goods are physically stored in the Amazon UK warehouses and then delivered from there, so the place of supply is the UK requiring a UK VAT registration. Distance selling will only apply if the goods are located in Sweden when allocated to a B2C customer order.
Distance sale
Distance selling will only apply if the goods are located in Sweden when allocated to a B2C customer order.
The supply meets the two conditions states under s.7(4):
(a)the supply involves the removal of the goods to the United Kingdom by or under the directions of the person who supplies them; (b)the supply is a transaction in pursuance of which the goods are acquired in the United Kingdom from another member State by a person who is not a taxable person Therefore, it's a distance sale. Further in order to register for UK VAT either the business should be established in the UK or be a non-established taxable person which I don't think apply to the OP's situation.
no its not
The goods are moved to the UK under the ownership of the Swedish company and are a movement of own goods. On this basis the Swedish company is holding consignment stock in the UK and is required to register in the absence of appointing a tax agent to account for the acquisition tax.
The goods are NOT acquired in the UK from Sweden so it is not a Distance sale.
Reference
The goods are moved to the UK under the ownership of the Swedish company and are a movement of own goods. On this basis the Swedish company is holding consignment stock in the UK and is required to register in the absence of appointing a tax agent to account for the acquisition tax.
The goods are NOT acquired in the UK from Sweden so it is not a Distance sale.
So what will the Swedish company register as: a business established in the UK, NETP, or something else?? Also please can you provide some legislative or other reference to what you're saying/
Edit: To expand further on this:
It's a consignment stock (basically acquisition Sch 4, Para 6 VATA 1994) if the goods are removed from one member state to another. In the case of Amazon the goods are purchased online and delivered to Amazaon warehouse in the UK. So I'm not too sure how it meets the 'acquisition/consignment' condition.
Further, in the case of acquisitions UK VAT registration will apply only if the acquisition in a calendar year exceeds UK VAT registration threshold, unless one goes for voluntary registration. So a) if the value of the goods moved to the UK Amazon warehouse is within the UK registration threshold, b) the Swedish company is not UK VAT registered, and c) if it makes supplies to UK non-business customer it needs to either charge Swedish VAT or it needs to charge UK VAT. Because it is not UK VAT registered I would think that it should then be distance sale. Again note that the distance sale threshold of £70,000 will be achieved quicker than the domestic registration threshold, therefore the suggestion for distance sale registration.
Ohh dear
You are over complicating this. Swedish company moves stock into Amazon UK warehouse. That is a supply of own goods. Amazon advertise the goods for sale and a customer buys. Amazon pick the goods from the stock owned by the Swedish company on Amazon premises. That is a domestic supply if the customer is in the UK . A Distance sale if the customer is not registered but in another Member State as the Swedish company arranges for the delivery of the goods from the UK sing Amazon's services.
As to legislative basis I am sure you can work that out if you understand the supply chain!!