UK-Based Director for VAT Compliance

[Hassan999]

Hello all,

I'm facing a challenge with Amazon regarding VAT, which has put me in a position where I need to prove my business is established in the UK. Without a UK-based director, I'm looking at a potential VAT bill of £10,000.

To resolve this, I'm keen to appoint a UK resident as a director for my company. This is a paid role. If you're interested or might know someone who fits the bill, please get in touch so we can discuss the details.

Thanks a bunch!

 

[Customs Geek]

Hi

According to HMRC A registered, serviced or virtual office is not enough to create a business establishment. For example, if you are a company incorporated in the UK, sell all goods using an online marketplace and only have a fulfilment centre in the UK, then you are not UK-established.

You will not only need a UK based director but you will also need to prove that your business :

• makes essential management decisions and carries out its main administration in the UK
• has a permanent physical presence in the UK, with human and technical resources to make or receive taxable
supplies
To prove that, HMRC need to see at least two types of evidence from this list.

• rental, lease or tenancy agreements, with proof of payment
• records of the staff the business employs – for example, Names, National Insurance numbers, addresses of
employees and PAYE reference
• council tax bills
• utility bills
• National Insurance numbers for the directors

The premises must be capable of making or receiving taxable supplies.

These are not new rules to determine whether a business is established in the UK.
What you are facing is not something specific to Amazon but applies to all OMP’s

 

[Hassan999]

Thanks for the info on the HMRC requirements.I know that's why I'm currently seeking a UK resident to join as a director to help meet these standards. Appreciate your guidance!

 

[Newchodge]

Thanks for the info on the HMRC requirements.I know that's why I'm currently seeking a UK resident to join as a director to help meet these standards. Appreciate your guidance!

Do you already have business premises in the UK?

 

[Hassan999]

Do you already have business premises in the UK?

We have secured a virtual address in London, which serves as our company address.

 

[Newchodge]

We have secured a virtual address in London, which serves as our company address.

Did you read @Customs Geek post #2? A virtual address is not enough. Neither is a UK based director unless they make managerial decisions about your business.

 

[Hassan999]

Yes, I'm aware of that. We are also arranging for a physical address to further comply with the requirements and ensure our setup is fully aligned with UK regulations.

 

[Newchodge]

Yes, I'm aware of that. We are also arranging for a physical address to further comply with the requirements and ensure our setup is fully aligned with UK regulations.

Presumably the VAT bill relates to transactions that have already happened? How are you going to deal with that?

 

[antropy]

I'm facing a challenge with Amazon regarding VAT, which has put me in a position where I need to prove my business is established in the UK.

But it's not established in the UK and wasn't established in the UK? Surely it needs to have been established previously for VAT purposes?

Paul.

 

[Hassan999]

If I can prove that the director of our company is a UK resident, we won't have to pay any VAT on previous sales either

 

[boxlot]

I don't think it's that simple. Company director will be responsible how the business is run. If something goes wrong the director have to answer to HRMC, banks, unpaid loans/invoices etc.

 

[fisicx]

It means all correspondence will be sent to the UK address. It would cut out the overseas directors and operations.

 

[Hassan999]

Yes, all correspondence will indeed be directed to the UK company address. However, please be assured that the overseas directors will continue as integral members of the company, and all operations conducted by our overseas team members will proceed as usual.

 

[Customs Geek]

If I can prove that the director of our company is a UK resident, we won't have to pay any VAT on previous sales either

You can’t retrospectively appoint a UK director . The date of appointment of a director is a matter of public record and will be visible on the company’s house records.
Similarly with the company address . You cannot change the NETP status of your company retrospectively .
HMRC are enforcing the VAT rules that have been in place since 2021 and are charging Amazon for VAT they should have added to the goods price for the past period . As you were the seller, Amazon are seeking recovery from your company so it is Amazon that you need to convince which won’t be easy.
I don’t see why anyone would want to be a UK director for your company and have the responsibility that comes with it.

 

[apricot]

This is nothing more than Amazon's mess! They asked me for the same documents.

My company is UK registered, and we have VAT registration in 5 other EU countries, with all VATs paid up to date. I am a UK citizen, based in the UK. I sent all the documentation, and Amazon is still not making the payment. When I asked for the reason for rejection, they cited 'security reasons'. What I see is their aim to hold on to UK business payments as long as they can!

 

[Newchodge]

This is nothing more than Amazon's mess! They asked me for the same documents.

My company is UK registered, and we have VAT registration in 5 other EU countries, with all VATs paid up to date. I am a UK citizen, based in the UK. I sent all the documentation, and Amazon is still not making the payment. When I asked for the reason for rejection, they cited 'security reasons'. What I see is their aim to hold on to UK business payments as long as they can!

The difference, perhaps is that you were compliant.

 

[NickZ]

This is nothing more than Amazon's mess! They asked me for the same documents.
When I asked for the reason for rejection, they cited 'security reasons'.

Time to look for alternatives.

A independent e-commerce cost under $100 for domain and server. There is free e-shop software, Magento, Shopware, Prestashop, Thirtybees. among others.
Beware with Shopware and Prestashop those to a morphing into a SaaS Hybrid. Shop for rent basis.
Still those 2 will have a free basic set up.

 

[apricot]

Time to look for alternatives.

A independent e-commerce cost under $100 for domain and server. There is free e-shop software, Magento, Shopware, Prestashop, Thirtybees. among others.
Beware with Shopware and Prestashop those to a morphing into a SaaS Hybrid. Shop for rent basis.
Still those 2 will have a free basic set up.

Set up a website is not the problem and it is not an alternative to Amazon. It costs 3 times more to drive the traffic that Amazon sends, and even if you get the traffic, it is way harder to convert customers. I don't think there is any alternative to Amazon - at least not in the UK market.
I wish John Lewis open their online store to UK sellers only, that would be a huge competitor to Amazon.

 

[NickZ]

Set up a website is not the problem and it is not an alternative to Amazon. It costs 3 times more to drive the traffic that Amazon sends, and even if you get the traffic, it is way harder to convert customers.

it is better to have a website plus a shop, Do you really believe that Amazon will relax and give everyone a break? Amazon has restricted sellers for 7 years now. If they close the shop you have nothing left, or they just copy your products and sell those themselves.

There are always reasons against changes. We are in the end our own enemy.

 

[fisicx]

Set up a website is not the problem and it is not an alternative to Amazon. It costs 3 times more to drive the traffic that Amazon sends, and even if you get the traffic, it is way harder to convert customers.

If that’s your experience then you are doing it wrong. I agree Amazon can be a good place to sell but with the right marketing and independent website can easily compete.

 

[Paul Kelly ICHYB]

You have to have both..... and ebay.... and other things. Don't restrict your business!