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VAT registration if trading in US

UK registered Ltd but trading in US via Amazon US -Does the company need UK VAT registration

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Would appreacite some help please.

Client is a UK based Ltd company. They are trading via Amazon US and selling in US and the turnover is appro $120k. They buy from e.g. china and the supplier sends goods to Amazon in US directly (no UK goods transfer). Amazon then distribute in vaiouus US warehouses and sell in US. Amazon US then transfer the sale proceeds (less their costs) to the client US $ bank account. Client then transfers this money to UK in £ once a month. 

Client is UK (London) based and hence registered in UK. So far there in no UK trade.

 Does the client need UK VAT registration.

Replies (13)

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By shaun king
13th Feb 2017 16:38

No he does't as he isn't making any taxable supplies in the UK. However, if he wants he can register for UK VAT to recover input tax on any UK Overheads but that wont affect the US trading position.

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Hallerud at Easter
By DJKL
13th Feb 2017 16:47

Well, that is one business that only has a shelf life until an executive order re imports from China kills it dead.

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By Lisa02
13th Feb 2017 17:54

Great, thank you for the reply Shaun, appreciated.

Basically, for my knowledge, should only consider VAT if making supplies from the UK ? If were making supplies from UK to outside of EU (ignoring Brexit) then would still need to register for VAT if reach threshold ?

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By Lisa02
13th Feb 2017 17:56

Yes, DJKL, if it were to happen then would impact a lot of businesses. However, from what I understand the discussion is on 5% import tax, which will dent margins but possibly not sink

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By shaun king
13th Feb 2017 18:08

If the goods are in the UK when ownership changes - then UK VAT will bite. It could be an EU B2B supply no VAT, EU B2C standard rate (unless Zero rated) and you need to consider distance selling. Sales outside the EU Zero rated.

A quick resume but at a very high level

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By Lisa02
13th Feb 2017 18:30

Thank you Shaun.

Could I ask one more question re VAT please ?

Another client is importing wine in the UK and selling to UK customers. He is UK registered ltd and UK VAT registered. However, he has recently receive orders from customers outside of EU and Scandinavia. He will supply directly from Italy to these countries. Does he need to charge VAT on these sales.

Will appreciate a reply.

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Replying to Lisa02:
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By shaun king
13th Feb 2017 21:41

Is he REDS registered in the UK for uk sales? If he supplies from Italy he probably should be registered as the Italian supplier should charge IVA

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Routemaster image
By tom123
13th Feb 2017 18:37

So - UK VAT not an issue. Have you confirmed the situation with regard to any US taxes?

(I can't help with that - but just thinking aloud)

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By Lisa02
13th Feb 2017 18:44

Hi Tom,

I think so, i.e. for the US VAT as the goods not shipped from UK to US customers then don't need to register.

However, if were to ship from UK to Europe or outside then would need to register if reach threshold.

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By Lisa02
13th Feb 2017 20:48

However, if I am wrong on my understanding then anybody please feel free to correct.

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By Brend201
15th Feb 2017 11:43

Regarding the US issue, your client needs to be careful in determining who is his customer. You say that Amazon "then distribute in various US warehouses and sell in US". This implies that Amazon is the customer. If so, there is no problem. However, in my opinion, it is far more likely that your client is actually selling directly to Amazon.com customers using Amazon's Fulfilled By Amazon service (FBA). If so, your client is the seller and thus responsible for relevant taxes. If the customers buying from him on Amazon.com are based in the US, then I don't think he has a UK VAT problem. However, if some of his customers are based in the UK (which is a possibility), then he must comply with the UK distance selling regulations - for which the threshold is £70,000. He/you need to study the sales analysis from Amazon as well as the distance selling rules.

He should also check out his obligations in relation to local US sales taxes. Lots of online info on these. "Nexus" is important - and often relates to the location of the warehouse, so Amazon using various warehouses could be an issue here. Be careful on the scope of the advice that you give your client.

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Replying to Brend201:
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By shaun king
15th Feb 2017 13:08

Not sure where distance selling comes in here!! Any UK sales will be imports if coming into the UK and then terms of sale become important.

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By Digit Dabbler
15th Feb 2017 13:14

Seems to me this issue is far too important for Any Answers if you have taken responsibility for advising your client. You need to establish the exact facts and get written specialist advice. For example, is he making taxable zero-rated supplies, or are his supplies outside the scope for VAT? What are his obligations in the US? Is he paying tax on the Chinese exports which are potentially reclaimable?

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