VAT query for selling sneakers on online platform "Stockx"

[Livingstone1990]

Hi all,

Looking for a bit of advice on selling on a sneaker platform known as Stockx.

I'm the sole director of a VAT registered limited company that sells limited-edition footwear similar to those sold on their website. Stockx was based in the states however moved into Europe in 2019 but still registered as an LLC in the states. I'm aware that my sales prior to their move were VAT exempt but I'm unsure as to whether or not they still are. Seems as though they are based in the states still but have UK hubs.

Any advice would be greatly appreciated.

 

[Scalloway]

Businesses selling goods in the UK using online marketplaces

https://www.gov.uk/guidance/vat-ove...an-online-marketplace-to-sell-goods-in-the-uk

You must register for VAT in the UK if
You are an overseas seller selling goods as a business activity where those goods are located in the UK at the point of sale, or where the goods are sold to a UK customer and then imported into the UK by the seller (there is no threshold).

If you are selling goods as a business activity that are in an EU member state (known as ‘distance selling’) and your sales to UK consumers are more than £70,000 a year.

 

[Livingstone1990]

Businesses selling goods in the UK using online marketplaces


You must register for VAT in the UK if
You are an overseas seller selling goods as a business activity where those goods are located in the UK at the point of sale, or where the goods are sold to a UK customer and then imported into the UK by the seller (there is no threshold).

If you are selling goods as a business activity that are in an EU member state (known as ‘distance selling’) and your sales to UK consumers are more than £70,000 a year.

Hi, thanks for your input... I understand that. But that's not what Im asking

 

[Bobbo]

I don't understand your query. I assume you are UK based. Where is your stock based? And where are the customers you are selling to based?

 

[Scalloway]

I was hoping my reply would tease out a bit more detail as to what the query is.

 

[Livingstone1990]

I'm UK based and the stock is in the UK.

Il try and explain how StockX works to give you guys a better understanding

It's essentially a live ‘bid/ask’ marketplace. Buyers place bids, sellers place asks, and when a bid and ask meet, the transaction happens automatically. There is complete anonymity so unlike eBay you don't know who the buyers and sellers are.

When a customer goes to buy something the purchase page says the price includes all VAT and duties etc. When I sell an item it's shipped to a UK hub where they authenticate and check the item and then ship on to the customer.

My query is if I have to pay VAT on the sales through stockx

1- They are a USA based company but have UK hubs
2- The buyer pays VAT when he successfully bids on a pair of shoes(this is included in the price according to the checkout page). Do I still have to pay VAT on that sale as then VAT is basically being paid twice on one sale?

Sorry if I'm coming across as a bit of a rookie, all of this is fairly new to me

 

[Scalloway]

Do StockX take a cut of your sale price?

 

[Livingstone1990]

They take roughly 10%. But the payouts from them are minus their 10% fees

 

[Bobbo]

I think the initial course of action is to contact StockX to determine what their VAT arrangements are.

It may be that under VAT on e-commerce rules they have to charge VAT to the customer but it is you as the actual seller that needs to account for this VAT to HMRC. If they are paying you the selling price less 10% fees it sounds like any VAT they are telling the customer has been charged is being passed to you (i.e. they haven't accounted for it to HMRC).

 

[Livingstone1990]

Gave this a go

I think the initial course of action is to contact StockX to determine what their VAT arrangements are.

It may be that under VAT on e-commerce rules they have to charge VAT to the customer but it is you as the actual seller that needs to account for this VAT to HMRC. If they are paying you the selling price less 10% fees it sounds like any VAT they are telling the customer has been charged is being passed to you (i.e. they haven't accounted for it to HMRC).

Tried contacting them a few months ago and they are completely useless. All the support staff and management are US based and don't really have much of an idea about VAT regulations etc.

Most sellers on the site aren't VAT registered so I dont think they would pass it on to the sellers.

When buying the site indicates the price is inclusive of VAT as shown below...

"
Total
£187.57
*All applicable duties and VAT are included in the total price of this item."

 

[Scalloway]

From one of their help pages

https://help.stockx.com/s/article/How-does-shipping--VAT-work-for-European-buyers?language=en_US

"The processing fees that are charged within each transaction accurately reflect the true cost of duties and taxes required within Europe. For our European buyers, this creates a more transparent pricing policy where what you see is what you get. No additional taxes, duties, or VAT will be collected upon delivery of your item."

Which would suggest to me that they assume VAT is included in the price for EU customers as is the rule for B2C transactions.

So you need to account for VAT on your sales.

 

[Livingstone1990]

From one of their help pages



"The processing fees that are charged within each transaction accurately reflect the true cost of duties and taxes required within Europe. For our European buyers, this creates a more transparent pricing policy where what you see is what you get. No additional taxes, duties, or VAT will be collected upon delivery of your item."

Which would suggest to me that they assume VAT is included in the price for EU customers as is the rule for B2C transactions.

So you need to account for VAT on your sales.

If they're accounting for VAT and I'm accounting for VAT on my sales is VAT not then paid twice on 1 sale?

Most sellers on the platform are Non VAT registered or individuals selling off personal collections so if it's assumed that VAT is included in the price how would that work on a C2C level?

 

[Scalloway]

What they are saying is the customer won't have to pay VAT when they get the parcel, as would happen if it was being shipped from the USA.

StockX are not a shoe retailer. They make their money from the fees they charge by facilitating your sale to the customer. They collect the money from the customer on your behalf, acting as a middleman. So you are liable for the VAT on the sale.

 

[Livingstone1990]

What they are saying is the customer won't have to pay VAT when they get the parcel, as would happen if it was being shipped from the USA.

StockX are not a shoe retailer. They make their money from the fees they charge by facilitating your sale to the customer. They collect the money from the customer on your behalf, acting as a middleman. So you are liable for the VAT on the sale.

Thanks a lot for your input its definitely given me more clarity. Have one quick question;

I also have the option to ship to the stockx base in the US. Would this make the sales 0 rates then as they are leaving the EU?

 

[Mr D]

You then get into the realm of sales tax for US sales.

 

[Scalloway]

Yes you can zero rate the sale if you have proof of export. There is a lengthy article here on what is considered proof.

https://www.gov.uk/guidance/vat-on-goods-exported-from-the-uk-notice-703#sect6

 

[rexs-creps]

Hi @Livingstone1990 I'm in a similar predicament to you, selling on Stockx as a VAT registered LTD. Could you drop me a dm?

 

[Linford0]

To answer the original query:

StockX deal in dead stock sneakers but they are all secondary market, thus second hand. The original seller is likely, therefore, not to be VAT registered. StockX themselves are VAT registered but are presumably carrying on trade in the UK under the Auctioneers' Scheme (VAT Notice 718/2) which means that they are charging VAT on their commissions and additional services (delivery etc) but not on the Sneakers themselves.

As a UK VAT registered trader you can use The Margin and Global Accounting Scheme (VAT Notice 718) to account for the VAT on the profit you make when you resell the sneakers without having to record input tax from the StockX purchase.

Hope this helps.

 

[Spur Support Services]

I think this is definitely a query to be taken up with your accountant.

It does sound like StockX are being singularly unhelpful, however, this is an area that should be documented in your contract with them (ie terms and conditions of using their site).

Most online retailers will calculate your VAT to make it easier to integrate accounting and tax data from their platforms into your VAT reporting accounting software. This does not mean that they are paying the VAT over on your behalf.
Have a look at their reports and see if the detailed transaction reports assign a VAT number to each transaction. There may be a data field that confirms the "ownership" of the VAT reporting task to HMRC, although the absence of such a field doesn't absolve you of responsibility.

If there is any cross border aspect to your activities, then there is likely to be an additional and changing level of complexity, as to whether overseas import VAT will be applied within the "shipping" charge, so your income on a VAT and Duty paid basis may include VAT from another country. The liability for paying and reporting this overseas VAT is likely to change on 1 July in EU countries where online marketplaces become responsible for the payment of VAT (expect EU rules in each country to be similar to the information linked by Scalloway, but not the same).

As Linford indicates, if you are selling second hand (used) goods purchased from non-VAT registered individuals, then you may be able to consider the VAT margin scheme and Global Accounting Margin Scheme, but again you need to consider what data is held and reported both at StockX and your own accounting system to support the use of this scheme and the marginal VAT calculations, and be sure to understand if and how the StockX are applying the Auctioneers Margin Scheme.

Good luck with your research.