Amazon UK VAT Shock! Numerous seller accounts frozen! Additional payments required!
Recently, many sellers have received emails from Amazon regarding additional tax liabilities. The emails state that Amazon will assess the accounts of sellers and demand the payment of any outstanding UK VAT owed since January 1, 2021. During this period, sellers will have their account frozen, and will not be able to withdraw any funds from their accounts.
For numerous UK sellers, this is undoubtedly a major shock because once their accounts are frozen, it could result in incalculable losses. This is mainly caused by two issues:
Firstly, their UK VAT registration address may be an HMRC address. Any business with a VAT registration address displaying an HMRC address is not recognized as a UK-based enterprise. You can visit https://www.tax.service.gov.uk/check-vat-number/enter-vat-details to check. If it shows an HMRC address, it will be subject to the additional tax liabilities.
Secondly, a seller’s actual business address may not be located in the UK, and the address provided during the VAT application process may not be a genuine commercial operating address in the UK. When checking the VAT registration details, if it does not display an HMRC address but instead shows “non-UK company,” it is also possible that additional tax liabilities will be applied gradually.
The recent VAT number exposure event in the UK is something that UK sellers must take seriously and prepare for in advance! With the increasing scrutiny of European tax authorities, future VAT reporting and audits in the UK are also likely to become more stringent. Only by operating in compliance with the regulations can businesses mitigate unnecessary tax risks and ensure long-term stability and growth.