How VAT Works

One of the most popular posts I’ve ever written on this blog is about selling on Amazon.co.uk. Since that post I’ve had many emails asking me for details about how VAT works, so I thought it would be useful to post the major points you need to know about VAT. Before I go any further I should probably mention that I’m not a lawyer nor am I an accountant, nor for that matter British! So make sure to consult a professional before doing anything too crazy. Ok with that said, here are the most common questions answered.

1. Do I have to apply for VAT? Yes. there was a a threshold 2 years ago but now you must register regardless of the volume of sales. Amazon.co.uk will not even let you open an account without the registration.

2. What is the VAT rate? The standard rate you can expect to pay is 20% of the value of the items. There are some exceptions but this almost completely covers anything that you would sell on Amazon.

3. How long does this take? It’s actually pretty quick. They will get you the number within 15 business days of applying.

4. Do I need to keep any special records? You just need to have sales records, plus records of what VAT you have already paid.

5. Do I need to incorporate in the UK? No. You can use your US legal entity.

6. How frequently do I have to file? Every 3 months.

7. How do I apply? This link will take you to the online application.

8. How do I pay? Once you have an account you pay online. Here is a link to the payment area.

9. This sucks! Can’t I just pay someone to take care of this for me? Yes! Amazon referred me to regionalexpress.co.uk. Particular they said ask for Eric who is the managing director. I didn’t personally use them, but they are the go to guys according to Amazon.

I think that covers most of the questions I’ve gotten, but if you have more add them to the comments. I doubt I can answer them but I could ask see if we could get someone from Regional Express to.