eBay recently wrote to business sellers to remind them of the upcoming changes to how VAT will be charged on fees. Effective from the 1st of August VAT will be applied to all fees. For the first time sellers will be able to reclaim the VAT on their VAT returns.
Historically sellers were unable to reclaim VAT but if they gave eBay their VAT number eBay would deduct the VAT at source. Then for the past 18 months eBay had special dispensation to not charge VAT for any business seller (even if they weren’t VAT registered).
This follows on from last year’s package of measures introduced by the Chancellor, aimed at tackling the rapidly growing VAT evasion by overseas traders that sell goods in the UK via online marketplaces such as eBay, Amazon and others. As a result, HMRC was given the power to force online marketplaces to ensure that their overseas customers were registered and accounting for VAT or risk being liable for the VAT themselves.
The change to how eBay charge VAT
Now, from the 1st of August eBay UK will bill from a UK entity and charge VAT on fees and only those who are VAT registered and able to claim input tax credits will be able to recoup the VAT paid to eBay.
Many sellers have welcomed the move – eBay will be charging VAT as a UK entity and the VAT will be passed to the exchequer. Sellers, especially those who have been suspected of dodging VAT will find the VAT added to their eBay invoice and if they’re not registered for VAT with HMRC won’t be able to claim it back!
For sellers who can reclaim VAT it’s effectively just a cash flow and accounting change with no financial impact to their bottom line.
Those it will negatively impact
There are a few sellers who will be negatively impacted – sellers registered as businesses whose turnover is too small to compulsorily register for VAT will either start paying VAT at 20% or take the decision to voluntarily register. Also sellers on certain VAT schemes who are unable to reclaim input VAT will also see their costs rise. It’s important to realise that this isn’t eBay’s fault however (net fees are not changing). VAT is a government mandated charge and for the past 18 months sellers have had a free ride and it’s just that this added Brucie bonus is coming to an end.
What if you’re billed mid month?
If you’re a business seller billed on the 15th of the month, your invoice dated the 15th of August 2017 will show VAT on all your fees. However, you’ll also see a credit for any VAT applied to your fees between the 16th and 31st of July.
If you need further help or have questions on VAT, we’d be happy to help. Perhaps we can help organise your accounts with a free month of Xero? Get in touch to organise a free of charge consultation. Drop us an email email@example.com or give us a call 01858 289189
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The holiday season is upon us!
Getting ready for your holiday is the best – you’ve had your bags packed for days (weeks for some!), purchased endless supplies of suncream and switched on the out of office. The only worries you’ll have for the next week or so is whether to go for a crisp glass of white wine or a Sangria with dinner… bliss. Unless you’re a business owner, that is…
We often meet new clients and local businesses that are flourishing and growing beyond their expectations. They soon face the challenge of deciding whether or not to employ new staff or outsource their work to meet a growing demand.
This week we’ve been looking at the options available when employing or outsourcing. The decision is ultimately one that best meets your business needs, budgets and work load. Nonetheless, you should consider the pros and cons of both sides before you act. It could be the difference in the success of your business moving forward.
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This month we’re discussing Business Plans. Many business owners and budding entrepreneurs think that the Business plan is dead. But truth is, a Business Plan, even a short one can help you to gain focus, set a new tone for your business and certainly assist with building a new business. The perfect roadmap for even the smallest or early stage idea.