Register for vat

chris100 · #1 05-10-2023

Registering for vat on stealth is not possible as it reveals your real details to Amazon.

Registering for vat with HMRC is messy as you are running several accounts with separate identities.

Problem is as a trader when your turnover hits 85k and you fill out your self assessment return. Hit that magic number and they will be asking you to register for vat.

Any issues doing this? Just combine all sales and cough up the 20%?

murdered_by_ebay · #2 05-10-2023

stealth VAT is only good for people who have non UK amazon accounts as they can register with HMRC under any details if the residence is abroad

Hank · #3 05-11-2023

The last thing on earth I'd do is wait for HMRC to find out I should have been registered and paying VAT. They will ask questions about income and its source and possibly issue penalties. It could send you to the top of their on-the-radar list too.

You might, just might, get away with dealing with it with HMRC as a payment exercise (must be done electronically every quarter) but as you've realised, you are expected to display your VAT number on the accounts which generate VATable turnover. Clearly there's implications of you not doing this. How would you deal with a business buyer who asks for a VAT receipt to claim it back? Issue one or lie? If it's the former and they get awkward about you not displaying it and issuing one automatically as demanded by Amazon then what next? What if the unholy happened and HMRC did an audit?

IMO you will never be able to legitimise VAT on stealth accounts and however you do it will be illegal in some shape or form but I appreciate you do not want to attract the wrath of HHMRC if they did find out - I know I wouldn't, and as we know Amazon will be sending income details to HMRC from next year so it has the potential to get even messier.

...or you could just do nothing and stress about each brown envelope that comes through the door. Not any more, but a decade or so ago I was jerking the system so badly not only did I start stressing when I heard the letterbox go but also when the doorbell rang.

Finally decided to legitimise my affairs as best I could, even today I'm not squeaky clean but certainly rest easier.

As an aside, are you generating this income from business accounts, I'm guessing so given their very small limits and goods criteria on private seller accounts.

chris100 · #4 05-11-2023

Quote:

Originally Posted by Hank

The last thing on earth I'd do is wait for HMRC to find out I should have been registered and paying VAT. They will ask questions about income and its source and possibly issue penalties. It could send you to the top of their on-the-radar list too.

You might, just might, get away with dealing with it with HMRC as a payment exercise (must be done electronically every quarter) but as you've realised, you are expected to display your VAT number on the accounts which generate VATable turnover. Clearly there's implications of you not doing this. How would you deal with a business buyer who asks for a VAT receipt to claim it back? Issue one or lie? If it's the former and they get awkward about you not displaying it and issuing one automatically as demanded by Amazon then what next? What if the unholy happened and HMRC did an audit?

IMO you will never be able to legitimise VAT on stealth accounts and however you do it will be illegal in some shape or form but I appreciate you do not want to attract the wrath of HHMRC if they did find out - I know I wouldn't, and as we know Amazon will be sending income details to HMRC from next year so it has the potential to get even messier.

...or you could just do nothing and stress about each brown envelope that comes through the door. Not any more, but a decade or so ago I was jerking the system so badly not only did I start stressing when I heard the letterbox go but also when the doorbell rang.

Finally decided to legitimise my affairs as best I could, even today I'm not squeaky clean but certainly rest easier.

As an aside, are you generating this income from business accounts, I'm guessing so given their very small limits and goods criteria on private seller accounts.

Thanks for this very comprehensive reply.

It's a case of giving HMRC what they want without disrupting stealth. If you can register for vat and just pay according to what is coming in each month (ie: they look no further than your bank accounts) then all well and good.
If they want to know sources of income and then follow up with Amazon...that's when problems will arise.
With no vat number logged with Amazon business customers would just receive a standard invoice. I hardly get any (under 5 a year) so could cancel their orders if it really came down to it.

The other concern is vat registration putting me (as you said) on their 'radar' and increasing the chance of a random audit/inspection.

This is where they will delve deeper and stealth could unravel. Again, it comes down to whether they just look at income and outgoings or whether they feel the need to liaise with Amazon?
If they do the mismatching details will be a red flag and they will suspect it has been done as a tax dodge (rather than just a way to get back on Amazon or have several selling accounts running simultaneously). The income tax and vat will need to be spot on.