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bypassing VAT thresholds = evasion?
 

In the UK VAT thresholds are $85,000 then you must register for VAT to charge 20% tax on all your sales and remit to the HMRC. Amazon.UK wont collect VAT tax until you enter your VAT number. Many sellers use multiple accounts to bypass this $85,000 restriction. But, you are still liable to the HMRC for VAT on all sales over $85,000.

So if you have 4 accounts, all have $50,000 sales ($200,000 total) none would have collected VAT and you're personally $115,000 over the limit and are liable for uncollected VAT on this amount.

Is there something I am missing here?

Re: bypassing VAT thresholds = evasion?
 

Sounds pretty accurate to me. Her Majesty is even more ruthless about taxes than the IRS. :lol:



Seriously UK guys, a queen? It's time to move on from people being born "royal". :focus:

Re: bypassing VAT thresholds = evasion?
 

The forum consensus for Amazon.co.uk accounts is:

1) Report and pay all your taxes
2) Use multiple accounts to bypass VAT

If you bypass VAT you are not collecting VAT and therefore are not collecting taxes you are legally required to do (on sales over $85,000)

If you have $200,000 in sales on 4 accounts and report this number to the HMRC but show you collected no VAT you are liable for the uncollected amount. The HMRC would notice this and audit you. Therefore are UK sellers evading VAT collection or are they not?

Am I not seeing something correctly here?

Id appreciate if someone can give me some insight here

Re: bypassing VAT thresholds = evasion?
 

I was just throwing in my 2 cents. You'll have to wait for UK members to chime in to get any sort of intelligent response on this one.

Re: bypassing VAT thresholds = evasion?
 

By bypass VAT what UK sellers are talking about (or should be talking about) is using multiple accounts to avoid having to disclose their VAT number, as the same VAT number across multiple accounts would cause linking.

Re: bypassing VAT thresholds = evasion?
 

Yes, that is understood. What I am saying is as a seller you are liable to collect and remit VAT to the HMRC on all goods sold over $85,000. These sellers are over $85,000 and NOT collecting VAT.

Re: bypassing VAT thresholds = evasion?
 

Just to point out we do use £ here...

If you run your calculations using $ your going to be a bit off due to the exchange rate.

Its not as simple as that. There are lots of different rates that you can apply for. 20% is just the headline rate.

You would be best off talking to an accountant. The forum really isn't the place for detailed tax advise.

Re: bypassing VAT thresholds = evasion?
 

I understand VAT rates vary by item and some are exempt such as books.

Regardless, if you sell over £85,000 and your goods are taxable you are liable for collecting and remitting VAT to the HMRC. By using 10 seller accounts to spread £500,000 of sales to bypass VAT collection you are still liable to collect and remit VAT to the HMRC of any amount above £85,000.

If I told an accountant I had £500,000 of sales for taxable goods he would say: "You are liable to collect VAT on taxable goods over £85,000".

So again, what are UK/EU sellers doing to collect and remit VAT? Are they even collecting?

Re: bypassing VAT thresholds = evasion?
 

Not what I meant

If for example you pay a Flat rate VAT in which case your not paying 20%

You really need to talk to an accountant... The forum is not the place for tax advise.

A company is liable to pay VAT on sales of £85,000. If you have 2 companies set up correctly then each can sell £85,000 although its not a straight forward as that. An accountant can help you with the details

Re: bypassing VAT thresholds = evasion?
 

If you are using Flat rate VAT or Standard rate VAT you are still required to register for VAT.

"A company is liable to pay VAT on sales of £85,000." Do you mean: "on sales OVER £85,000."?

The consensus i've found is people are using multiple accounts in order NOT to register for VAT so they can exceed £85,000 in total sales. Aggregating sales from all your accounts and exceeding £85,000 would result in a VAT owing on your part and the HMRC could easily see these Amazon disbursements in your bank records

Using a company for each account makes sense. Each account would be owned by a UK company which would retain the earnings and never let itself go over £85,000. You could then pay a reasonable salary or dividends to yourself from each at designated times. Although I don't believe many people are doing this because of the complexity and accounting costs. I also dont know if the HMRC would allow this, but logically it makes sense.

Re: bypassing VAT thresholds = evasion?
 

This is exactly why you need to talk to an accountant....

Legally speaking its tax evasion if you open up a new account purely to avoid becoming VAT registered. There are legal ways to do it however through Ltd companies.

The forum is not the place to seek that clarification though, a UK accountant is.