Joe Cox talks your obligations for EU VAT and as a seller and what can you do to stay compliant.

1. VAT: The basics and beyond
What Ecommerce and Online businesses need to know about VAT
Presented by: Joseph Cox ACCA

2. Who are we?
• Accountants and business advisors
• Based in London (Old Street)
• Specialists in Ecommerce
• Work with over 200 businesses

3. Who am I?
• Joseph Cox
• UK Charted Accountant
• Amazon Seller (Since 2012)
• My favourite tax is… VAT!

4. VAT: The biggest problem for
accountants and ecommerce
Why are we talking about VAT?

5. What makes VAT so
confusing?
• Distance Sales
• Place of Supply
• Upcoming Law Changes: MTD
• Digital Services

6. VAT: The Basics
What is VAT?
• Value Added Tax
• Tax on sales price (rather than profit!)
• Introduced in 1973 and is the third largest source of government revenue
• It is an indirect form of tax
• It is regressive as poorer people spend a higher proportion of their disposable income on
VAT than richer people

7. VAT: The basics
• Currently 20%
• E.g. Sales price = £10 + VAT then VAT = £2
• How do you calculate your VAT if you only know your selling price?
E.g. Selling price is £10…How much of this is VAT?

8. VAT: The basics
•Divide by 6!
• E.g. Sales price = £10 10/6 = £1.67
£10 – £1.67 = £8.33 £8.33 * 20% = £1.67

9. VAT: The basics
• How is VAT Calculated?
• Input Tax (Sales)
• Output Tax (Purchases)
• Inputs – Outputs = Liability (or rebate!)

10. VAT: The basics
• When do I need to register!?
• Overseas businesses vs UK businesses
• Voluntary registration
• Distance Sales

11. VAT: The basics
• How frequently do you need to file your VAT return?
• When is VAT due?
• How to pay VAT?

12. VAT: The basics
• How to register?
• When is VAT due?
• How to pay VAT?

13. EU VAT: Basics
• When to register?
• Goods Stored (“Nexus”)
• What are distance sales?

14. VAT Schemes
What are the different schemes?

15. VAT: VAT Schemes
• Standard Scheme
• Flat Rate Scheme
• Annual Scheme
• Marginal Scheme

16. VAT: Standard Scheme
• Input VAT minus Output VAT = VAT Liability (or asset!)
• Benefits:
+ You get to reclaim VAT on purchases
• Cons:
- You lose 1/6th of your sales margin on marketplaces
- It can be a headache to manage

17. VAT: Standard Scheme
• Example:
Sales of £83.33 plus £16.67 VAT (100/6 = £16.66)
Purchases of £30 including VAT (30/6 = £5)
£16.66 minus £5 = £11.66 due to HMRC

18. VAT: Flat Rate Scheme
• You can join the scheme if your turnover is below £130,000
• You pay a percentage of your gross sales
• Online retail percentage is 7.5%
• First year get 1% discount

19. VAT: Flat Rate Scheme
Example:
£100 including VAT of Sales (Gross)
£30 including VAT (cannot be reclaimed)
£100 multiplied by 7.5% rate = £7.50 VAT due to HMRC

20. VAT: Beyond
• Up coming law change: 1st April 2019 – Making Tax Digital
• Zero Rated Goods: https://www.gov.uk/guidance/rates-of-vat-on-
different-goods-and-services
Ecommerce Examples: Coffee, Babywear, Safety Equipment
• VAT for Drop Shippers – Place of Supply = No VAT

21. Questions?
Find out more: EcommerceAccountants.co.uk/book-appointment