Amazon VAT reverse charge on receipts

Hi Catherine - we might need a little more info here.

Reverse charge transactions relate to people buying items, not selling them. So, in the majority of cases you will be buying in an EU service, not selling goods. It can also apply to "goods" but these are very restricted (eg mobile phones & chips) and apply to UK transactions not the EU.

We sell goods via Amazon and then Amazon forward the funds to us. On the invoice that comes with funds, it says price is VAT exclusive and then at the bottom mentions about the EU VAT reverse charge.

Does that make sense?

Thanks for your help

I think I have got a bit confused with this!!

We sell via amazon.........the funds come from Amazon, but deducted from this is the fees. Now I think I have understood correctly that the sales will include VAT which we need to account for in the usual way, but the Amazon fees will be subject to the reverse charge?

E.g - Sales - £4000.00 Amazon fees - £500.00 Balance received - £3500.00

VAT would therefore be £666.67 Reverse charge would be £83.33 in and out Therefore £666.67 VAT payable.

So how do I get the £500.00 through Clearbooks correctly??

Thanks a lot

Hello Catherine.

If I might try to help, as we also sell through Amazon.

Paul is right, but few more words might help you.

1) Set this toggle http://www.clearbooks.co.uk/support/guides/vat-2/ec-vat-on-clear-books/

2) You should set up a Supplier called Amazon (or whatever other name you might have for that bunch of..... ) and ensure that they are set at 0% Vat and 'Services from EU Supplier'.

3) Then for each Amazon charge, you 'Create' a bill for that amount in the Amazon Supplier you have just created.

best wishes

G

Hi again Catherine and many thanks Graeme.

Ordinarily, many deductions from sales monies, can be dealt with via the bank explain screen by adding a negative sum first for the £500 followed by a positive £4,000 for sales however, in this case, as Graeme says, because you need to record a reverse charge purchase you will need to process two transactions through the bank account, one for the sale (£4,000) and another for the purchase (£500).

As Graeme says, you can process a bill first for Amazon's charges, paying it off from the bank account, or, alternatively, create a bank payment, using your Amazon supplier as the entity. This will generate an internal bill for you.

Thanks both.

So I have understood it correctly with the VAT on the sales element and reverse charge on the fees part?

Thanks so much, much clearer now.

What a good idea why didn't I think of that? :-)

I am simple?

Great idea.......I will definitely do it that way.

Thanks