VAT on Amazon Sales

[tire1]

Hello all,
I have a question here:
A friend of mine sells on Amazon. He lists the products on Amazon and onces item is sold, he dispatches the item to customer and every month, Amazon pays him directly into his bank account after deducting their commission from the amount.

Now the question is:
for VAT purpose which one of the following is correct:
1) Add the Amazon commission invoice to the money he received into his bank and pay the VAT on the grand total

2) Amazon is working as a bank here who is processing the payment for the seller. Thus, only the money received into his bank account is considered as sales, Hence no VAT to be paid on Amazon sales commission (invoice)?

3) Amazon is invoice is added to the total money received into the bank (to get the gross sales) but VAT is paid only on the money received into the bank account?

Feedback from someone who is already selling on Ebay/Amazon would be very helpful.

Ebay scenario is different. As Ebay transfers all the sales into his bank account and then raises invoice and takes the money from the seller. Hence Ebay is more like sales expense. Am I right in thinking that Amazon is very much like bank and you do not pay any VAT on Bank Charges?

 

[billmccallum1957]

The total sale price is VATable.

 

[tire1]

Thanks for your reply.
What is calculated as total sales: The total amount received in the business bank account
OR the grand total amount received in the bank and the total of Amazon charges?

 

[StevensOnln1]

The total charged to the customer by Amazon.

 

[Lavender2306]

Hello all,
I have a question here:
A friend of mine sells on Amazon. He lists the products on Amazon and onces item is sold, he dispatches the item to customer and every month, Amazon pays him directly into his bank account after deducting their commission from the amount.

Now the question is:
for VAT purpose which one of the following is correct:
1) Add the Amazon commission invoice to the money he received into his bank and pay the VAT on the grand total

2) Amazon is working as a bank here who is processing the payment for the seller. Thus, only the money received into his bank account is considered as sales, Hence no VAT to be paid on Amazon sales commission (invoice)?

3) Amazon is invoice is added to the total money received into the bank (to get the gross sales) but VAT is paid only on the money received into the bank account?

Feedback from someone who is already selling on Ebay/Amazon would be very helpful.

Ebay scenario is different. As Ebay transfers all the sales into his bank account and then raises invoice and takes the money from the seller. Hence Ebay is more like sales expense. Am I right in thinking that Amazon is very much like bank and you do not pay any VAT on Bank Charges?

Hi Tire,
When you sell your goods on Amazon your price is likely VAT inclusive, isn't it?
1. Let's say you have sold goods to your customers for a month of November in total £120,000 including VAT . And they have all paid and the money received by Amazon on your behalf is £120,000.
So this is your total gross sales. You will be required to account 1/6 of this gross sales as VAT.
The Amazon commission, even though it is deducted at source, is not relevant here for the accounting of output VAT purposes.
In your accounts you will have the following records:
Sales £100,000
Output VAT £20,000
Amazon commission £whatever the amount is.

2. Let's say that some of your customers haven't paid and the amount received by Amazon is less than you charged your customers, for example, £90,000. In practice this probably would not happen, but for the sake of your question, we suppose this is the case.
Again, your sales gross total is still £120,000 and therefore VAT is still £20,000.
Of course, the above is true unless you are using cash accounting or flat rate schemes.
Are you a standard rate payer?

 

[tire1]

Hello Lavender2306,
thanks for your detailed reply. I agree with you.He is a standard rate payer.

 

[Lavender2306]

Hello Lavender2306,
thanks for your detailed reply. I agree with you.He is a standard rate payer.

Sorry, of course you were asking about someone else.