eBay and the VAT man ?

eBay and the VAT man ?

Author
Discussion

1441

Original Poster:

1,304 posts

233 months

Friday 19th September 2014
quotequote all
Little follow on from the eBay managed returns regarding VAT.

We had our first eBay managed returns request like many have recently, we was initially told it would be next year and the last communication from them dated Aug 13th clearly states this, that prompted a phone call but that's another story however I also raised the subject of VAT.

When you accept a eBay managed return eBay charge the seller, copied below is what they charge for a small packet.

"Negotiated rates with Royal Mail, so returns are priced from £2.78 (incl. VAT)
Great news! We’ve negotiated rates with Royal Mail. Now you can use their Tracked 48-hour service for items weighing less than 2kg, starting from £2.78 (incl. VAT)."

Clearly including VAT, this raised the question during my phone call "can you provided me with a VAT invoice for each managed return please" the answer was no but as we are VAT registered it will be taken account on our monthly eBay invoice. I look forward to checking that one, been VAT registered our fee's are reduced by the Lichtenstein 15% vat rate, will they try to give us 15% back from any managed return charges? Royal mail must be charging 20%, I don't know ?

Finally looking at some eBay forums eBay are giving out some dodgy advice on this, copied below....

"VAT Receipts. eBay wants me to call Royal Mail (or Colect + or Parcel Force) and ask them to get an eBay invoice, remove all reference to eBay, falsify it with my company details and then send it to me. Then eBay suggests I submit a fraudulent VAT return. Honestly, you couldn't make this one up. Well obviously someone did but you know what I mean. The seller is paying eBay, eBay has to provide the VAT invoice."

Anyone with better understanding of VAT than me care too comment ?


PurpleMoonlight

22,362 posts

157 months

Friday 19th September 2014
quotequote all
I thought Royal Mail charges were VAT exempt.

1441

Original Poster:

1,304 posts

233 months

Friday 19th September 2014
quotequote all
no, all our Royal mail invoices have VAT added.

2 sMoKiN bArReLs

30,254 posts

235 months

Friday 19th September 2014
quotequote all
1441 said:
no, all our Royal mail invoices have VAT added.
I thought only some Royal Mail services have UK vat? Stamps for letter post don't attract UK Vat?



Edited by 2 sMoKiN bArReLs on Friday 19th September 09:03

1441

Original Poster:

1,304 posts

233 months

Friday 19th September 2014
quotequote all
All I know is we have a OBA, they collect from us daily and well over 12 months now they introduced VAT to our invoices.

IATM

3,792 posts

147 months

Friday 19th September 2014
quotequote all
interesting one really because VAT will be of course 20% and as you said ebay VAT is 15% which technically they just take off if you are vat registered so you don't claim it back.

They will need to some how take it into account so either on the fees they will exclude 20% of the value or provide an invoice.

Eric Mc

121,988 posts

265 months

Friday 19th September 2014
quotequote all
Is ebay VAT 15% because it is based outside the UK?

1441

Original Poster:

1,304 posts

233 months

Friday 19th September 2014
quotequote all
Yes Eric, Luxembourg.

Eric Mc

121,988 posts

265 months

Friday 19th September 2014
quotequote all
The rules regarding foreign VAT can be complex.

Essentially, if you are UK based but non-VAT registered, you will be charged the foreign VAT by teh foreign supplier and you (obviously) cannot reclaim it.

If you are a UK VAT registered entity, you can request that the overseas supplier Zero Rates their charges to you. To do that you need to supply proof to the supplier that you are a legitimate UK VAT registered entity.

1441

Original Poster:

1,304 posts

233 months

Friday 19th September 2014
quotequote all
That's exactly the position, we like many UK VAT registered sellers on eBay have provided this proof and have 15% deducted from our fee's, its the new managed returns fee's that are in question, Royal Mail, Parcel Force etc. UK VAT registered will be billing eBay at ??% VAT.

If eBay reduce the managed return shipping fee by 15% is that job done ? I don't know if you read it all Eric but here again is the advice one seller was given by eBay regarding this, copied below.

"4. VAT Receipts. eBay wants me to call Royal Mail (or Colect + or Parcel Force) and ask them to get an eBay invoice, remove all reference to eBay, falsify it with my company details and then send it to me. Then eBay suggests I submit a fraudulent VAT return. Honestly, you couldn't make this one up. Well obviously someone did but you know what I mean. The seller is paying eBay, eBay has to provide the VAT invoice."

1441

Original Poster:

1,304 posts

233 months

Friday 19th September 2014
quotequote all
essentially eBay have "negotiated" on our behalf a shipping service that includes VAT, eBay will be billing us for this not the actual service provider.

surveyor

17,817 posts

184 months

Friday 19th September 2014
quotequote all
1441 said:
That's exactly the position, we like many UK VAT registered sellers on eBay have provided this proof and have 15% deducted from our fee's, its the new managed returns fee's that are in question, Royal Mail, Parcel Force etc. UK VAT registered will be billing eBay at ??% VAT.

If eBay reduce the managed return shipping fee by 15% is that job done ? I don't know if you read it all Eric but here again is the advice one seller was given by eBay regarding this, copied below.

"4. VAT Receipts. eBay wants me to call Royal Mail (or Colect + or Parcel Force) and ask them to get an eBay invoice, remove all reference to eBay, falsify it with my company details and then send it to me. Then eBay suggests I submit a fraudulent VAT return. Honestly, you couldn't make this one up. Well obviously someone did but you know what I mean. The seller is paying eBay, eBay has to provide the VAT invoice."
Surely Royal Mail as a VAT registered business and Ebay being VAT Registered and out of UK will not be charging VAT, Ebay should then depending on the rules in their registered country by declaring the purchase from EU and paying the VAT at 15%.

They then don't recharge this to you as you are outside registered country so you declare it and include at the normal rate as per norm on the return.

Only thing is why are ebay talking about VAT on agreed rates in this scenario?

Eric Mc

121,988 posts

265 months

Friday 19th September 2014
quotequote all
To be clear - are these charges being made by e-bay charges to cover postage and delivery or commission?

1441

Original Poster:

1,304 posts

233 months

Friday 19th September 2014
quotequote all

Eric Mc

121,988 posts

265 months

Friday 19th September 2014
quotequote all
Who will be charging the £2.48 - e-bay or Royal Mail?

If it is Royal Mail charging you, the chances are that there is no VAT involved because most of Royal Mails charges are VAT exempt due to their unique position as a former state controlled entity operating under a royal commission.

If it is e-bay charging you, then they would need to include in their charges any VAT that they are required to charge under the national VAT rules they operate under i.e. the VAT rules of Luxembourg.

1441

Original Poster:

1,304 posts

233 months

Friday 19th September 2014
quotequote all
As you can see, clearly VAT included.

eBay will be billing once per month, therefore the £2.78 should appear on our invoice from them with 15% deducted ?

Eric Mc

121,988 posts

265 months

Friday 19th September 2014
quotequote all
As you say, e-bay is a Luxembourg based business. They are VAT registered in Luxembourg. If they charge another business for delivery, they are probably obliged by Luxembourg VAT rules to add 15% onto the basic fee.

So, I would expect that the £2.78 fee is actually a fee of £2.42 plus .36p VAT.

If you are a VAT registered UK business, you should notify e-bay of this fact and they should Zero Rate the charge and charge you £2.42 instead.

If you are not VAT registered you are stuck paying the £2.78.


zoomy

80 posts

155 months

Friday 19th September 2014
quotequote all
If I read that correct then why would the royal mail charge ebay vat?
Surely as ebay are vat registered they should not be paying the uk vat rate?
You then also get the benefit of no vat on the ebay invoice if you are UK vat registered?
Therefore if you are not vat registered in the UK ebay should charge you the Luxemburg vat rate however not include the royal mail vat??

Eric Mc

121,988 posts

265 months

Friday 19th September 2014
quotequote all
How do we know Royal Mail is charging VAT on its supply to e-bay?

All that matters is that e-bay is charging (correctly) Luxembourg VAT on the services it supplies to its customers - whether the customers are in the UK or elsewhere.

If the customers do not want to be charged Luxembourg VAT, they need to provide e-bay with the correct VAT registration evidence which will allow e-bay to Zero Rate the invoices they raise to that customer.

anonymous-user

54 months

Friday 19th September 2014
quotequote all
I see it like this

the postage charge appears on your ebay bill

it is therefore nothing to do with you as far as royal mail is concerned, its contract is with ebay

ebay is adding it onto your bill in the same way that it adds listing fees etc.

you are no more able to claim back the VAT that ebay may / may not have paid to royal mail on the managed returns postage than you are able to claim back the vat that ebay may / may not have paid HP when it bought its last batch of servers

ebay's mistake is to mention VAT anywhere on anything to do with managed returns