Amazon's VAT lottery leaves buyers out of pocket
By Stewart Mitchell
Posted on 7 Nov 2012 at 12:12
Amazon's failure to disclose whether third-party Marketplace resellers are VAT registered is costing business buyers hundreds of pounds, a PC Pro investigation has discovered.
Although Amazon itself states VAT-inclusive prices for its own goods, products sold via Marketplace resellers can be listed either with or without the tax added depending on the company's VAT status, making it a lottery to know what the final price of goods will be.
For SMEs trying to find the best price possible, the cost can be significant, potentially meaning they can't claim back the 20% VAT as a business expense.
The situation was highlighted by a PC Pro freelancer, who was buying equipment for his company Creativemark, and found that some resellers weren't supplying the VAT receipts that would enable him to claim back almost £400 on a high-end laptop.
With very little to make it obvious whether a reseller on the site is a big business or a small scale non-VAT registered trader, it is impossible to know which trader is offering the best final price.
As the page above shows, the prices listed don't state whether the trader is VAT registered, and if the trader isn't registered they can't send a VAT receipt. In the example above, some of the MacBooks are sold via Amazon, some are sold by resellers but fulfilled by Amazon, while others are fulfilled by the resellers themselves.
"Amazon told me that some marketplace resellers are not VAT registered, thus can't send a VAT invoice," Wiles said.
"None of these prices tell you if they include VAT or not. It's complete pot luck! You could end up buying one of these laptop's for £1,995, as an example, without VAT, whereas you could have spent £60 more and bought from Amazon UK, which would include 20% VAT. So, buying the cheaper one would actually cost you far more as you couldn't claim back the VAT."
We've asked Amazon to comment on the situation, but the company has so far declined to respond.
When the PC Pro freelancer complained about not receiving a VAT receipt, the company referred him back to the reseller – saying the problem rested with the vendor.
"Since Amazon.co.uk isn't directly involved in the sale of merchandise between buyers and third-party sellers, we are unable to supply a VAT invoice for this order," the retailer said in correspondence on the matter.
"However, I have forwarded your request to the seller to ask that they issue a VAT invoice to you. If the seller isn't VAT registered, we've asked them to contact you to confirm their status."
According to Inland Revenue officials, the department feels Amazon does a relatively good job of explaining where tax is included on the site, but Wiles has often found that goods bought through the company arrive without a VAT receipt, which leaves him out of pocket.
The situation means non-VAT registered companies can make their items look more attractive by keeping prices below larger competitors, but not usually by the 20% they save in not having to apply VAT.
"This is the third time I've had to go to Amazon to ask it to nudge a marketplace reseller to send an invoice (often they do not send one automatically)," our freelancer said.
According to Inland Revenue officials, if a reseller doesn't charge VAT, it's obvious that the VAT can't be claimed back. "If a seller is not VAT-registered, they wouldn’t charge VAT, so there is none to reclaim from them," a spokesperson said.
But unless Amazon makes it clearer whether companies are VAT-registered or not, buyers will be none the wiser.
You can find out about VAT registration
"Unless Amazon makes it clearer whether companies are VAT-registered or not, buyers will be none the wiser." This sentence, (corrected for grammar) is not true, since a dirctory exists online listing all VAT registered UK businesses. It's part of the HMRC website....
By BornOnTheCusp on 7 Nov 2012
The perils of correcting others are manifest in yore[sic] post...
By wittgenfrog on 7 Nov 2012
"This sentence, (corrected for grammar) is not true, since a dirctory exists online listing all VAT registered UK businesses. It's part of the HMRC website...."
So, you are suggesting that companies should look through this database and somehow figure if the Amazon marketplace reseller is VAT registered, before ordering? You are suggesting businesses have the time to do this?
Plus, most resellers within the marketplace do not use their company name, so it's impossible to compare the reseller to any online database.
Spelling note: directory, not dirctory.
By moxxey on 7 Nov 2012
you can contact the seller before buying surely?
By gavmeister on 7 Nov 2012
Very confused story!
ALL the prices include VAT, the issue is whether you can claim it back or not. If the supplier is not VAT registered, they will not have been able to claim VAT back when they purchased the goods (or the raw materials if they made it themselves) so they are not at an advantage over VAT registered competitors (except in respect of their own mark-up).
So the onus should be on the VAT registered suppliers to trumpet this advantage - they should explicitly state that they WILL provide a VAT receipt. It is in their interests to state this and in the interests of the VAT registered customer to check before purchasing.
Seems like a simpler solution than asking Amazon to beet up the little guy!
By JohnAHind on 7 Nov 2012
I now make sure I either purchase from Amazon directly, or look for an explicit statement that the seller is VAT registered.
By Stiggy on 7 Nov 2012
"Seems like a simpler solution than asking Amazon to beet up the little guy!"
John, I think you misunderstand the point here.
Amazon is the 'merchant on record' for the sale of the item. They are providing the card processing, in some cases the fulfilment and ship (fulfilled products) in Amazon-branded boxes.
The point of the article is NOT to hammer down on the little guy, it's for Amazon to clearly show which products include or exclude VAT. Whether you can claim it back or not is irrelevant as this article is to show that you cannot figure this out, from the Amazon marketplace and that Amazon - not the little guy - is responsible for this.
Amazon need to make this more clear and cannot brush off the responsibility to their marketplace resellers. As Amazon are handling the payment, they need to be responsible whether businesses purchasing through Amazon can claim the VAT back or not.
By moxxey on 7 Nov 2012
But Amazon's prices (all of them) DO include VAT!
I checked just now, the first non-direct sale item I found stated clearly "Dispatched and sold by ..." with a link to the fulfilling company page. That page prominently displayed the seller's VAT number.
Amazon is a retailer - if companies want to treat them as wholesalers, then fine, but it is up to them to check the VAT status, which is not actually very hard!
By JohnAHind on 7 Nov 2012
"ALL the prices include VAT, the issue is whether you can claim it back or not. If the supplier is not VAT registered, they will not have been able to reclaim VAT"
Really? Since when did non-VAT registered traders charge VAT? Since they are not going to be forwarding any VAT they collect, to charge VAT would be fraudulent.
Surely the point of this story is that it is difficult for a VAT registered customer to know if there is any VAT to recover in the price shown. But nobody is at risk of paying any unrecoverable VAT - if there is no VAT in the price then of course you can't recover any, but only because you can't recover VAT that isnt there on the 1st place.
By martindaler on 7 Nov 2012
ignore the above - sorry - I was talking bullocks (or rather, what they had removed).
I guess the point is that non-VAT reg'd resellers may not charge any VAT on whatever negligible value they add, but they already paid (and did not recover) VAT on their input price, hence it is not available to be recovered by the next customer in the chain.
By martindaler on 7 Nov 2012
"I guess the point is that non-VAT reg'd resellers may not charge any VAT on whatever negligible value they add, but they already paid (and did not recover) VAT on their input price, hence it is not available to be recovered by the next customer in the chain."
Correct. A lot of people here are just not getting the point.
Lots of Amazon marketplace resellers compete on price. It's very hard to determine whether the price includes VAT or not (as the reseller may or not be VAT registered - and that's if you can get an invoice from them). Some resellers compete *more* effectively as their price doesn't include VAT.
So, if you are a VAT registered business and you go for the cheapest marketplace reseller price at £1500 and that £1500 is not VAT inclusive, you'd be *better* off buying the more expensive £1600 option, from a reseller that does include VAT as a VAT registered business can offset the VAT component against their input VAT.
Therefore the marketplace reseller option can be flawed for VAT-registered business purchasers as a) it's not always easy to determine if the price includes VAT and b) once you've purchased, it's not always easy to get a VAT invoice. You have to go to the Amazon customer services and ask them to request an invoice for you. Resellers aren't liable to offer an invoice at all, even on request. It's not a valid part of the order process and if they choose not to supply an invoice (post order), there's little Amazon will do about it.
Basically, it's quite 'hit and miss' for a VAT registered business to buy from Amazon. You can try and do some homework before you buy, but often Amazon will recommend a marketplace reseller as the first option and it's often so easy for any user to buy thinking you are purchasing from Amazon directly when you're not. You could be buying from some bloke selling from his bedroom.
By moxxey on 7 Nov 2012
would it be simpler if buy each seller's name and price it sat vat registered/not vat registered or private seller
By invalidscreenname on 8 Nov 2012
I think John is the only commentator who seems to understand the VAT system and what this story is actually about - and that probably includes the writer of the original story.
By jmiii on 8 Nov 2012
This is not a forum for discussing how the VAT rules work - but there's a whole heap of misunderstanding going on here.
The article makes the simple point that Amazon should indicate whether its marketplace sellers are VAT registered. The fact is it DOES know because when you sign up as a Marketplace seller you're asked this very question. So all it would take is to indicate the status of each seller - VAT registered buyers could then make their choice in an informed way. The seller would then be required to indicate the VAT component when entering their inventory - it's not exactly rocket science.
By KevPartner on 8 Nov 2012
It's an absolute mind field, I'd never buy anything of significant value for my VAT registered business from a marketplace seller: 1. because I've had several bad experiences in the past (fake memory cards, items never appearing); 2. due to the VAT issues highlighted here. I only know buy anything that is sold by Amazon directly, marketplace is just another type of eBay IMO - buyer beware.
By isofa on 8 Nov 2012
Why buy if you're unsure?
Why buy if you're unsure?s why anybody would spend such a significant amount as £2000 on a business purchase without first asking the seller if he is VAT registered. How hard can it be?
And if, as the article suggests, he has been caught out time and time again then he only has himself to blame.
I am sure I would find the time if I was buying a £2000 item!
I'm also staggered that the author of the article seems to think that a non-VAT registered seller is making 20% more profit than a VAT registered one.
I run a small, non-VAT registered business on amazon and occasionally get asked for a VAT receipt but I don't recall anybody ever asking for one after they have purchased an item from me.
By coolcity on 9 Nov 2012
That is one thing that is easier in Germany. If you set up to be a business, including a sole trader with low turnover, you have to register for VAT (or MwSt as it is called over here).
By big_D on 14 Nov 2012
What I love about the article...
Attempting to dispel the constant accusation that PC Pro are all Apple fans, they randomly pick an item for the screenshot - and it just happens to be an Apple products.
I guess it's an automatic reaction ;)
By artiss on 22 Nov 2012
Amazon's policy leaves much to be desired
As a VAT registered business, I find Amazon's general approach to VAT very frustrating.
It is impossible to obtain an electronic version of a VAT invoice - it is possible to print an invoice showing the amount of VAT paid, but not showing their VAT number (and thus containing the words 'this is not a VAT invoice'). They will happily send out a physical copy on request, but as the world's largest online retailer, you'd think an electronic copy would be preferred. For me this simply means I have to scan the receipt when I get it, which is quite ridiculous.
I have also been stung by the marketplace traders as mentioned above and believe that if Amazon are aware of that trader's VAT status, they should make it clear.
This deliberate level of vagueness with regards to VAT makes me suspect there is a reason for it - namely tax avoidance in some way.
By noseyPete on 8 Jan 2013
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