Ebay insisting I register for VAT even though my 12 month turnover is < 90K

[affordable-luxury]

Hi has anyone else had this problem?  I have been informed by Ebay that I must register for VAT or my sales will be stopped, even though my 12 month turnover is WELL UNDER 90K.  It's only just over 90K when you include returns.  I have a 20% return rate.  I am getting no sense from anyone I talk to at Ebay.  They have asked me to write to HMRC and get an 'exemption certificate' which apparently HMRC don't issue!  

[btr.style]

You need to check the right section for turnover. 

So there's sales report. Then there's dashboard figures. Dashboard figures are higher (for reasons I mentioned before) with regards to last 12 months of sales. Best to go by them. 

By the looks of your sales, it's 10k or thereabouts in the past month alone. That could have triggered it too as 85k/12 = just over 7k. So based on that turnover the system could well assume you will be earning that each month and so would exceed vat threshhold.  

Looking briefly at the past 2 months it's also thereabouts 10k a month, so eBay could well assume it's 120k a year turnover. 

It's a regular basis of sales x12 = exceeds the threshold significantly. So maybe eBay have gone in early and requested VAT registration. 

[affordable-luxury]

Yes I have 10k sales in the last month, but nowhere near 120k turnover. I have 20% returns. I am under 90k with returns. So I have to register for VAT even though I am under the threshold? What if I just stop selling for a while, then start again? 

[btr.style]

Doesn't matter about returns, that's not deducted. The figure is turnover. That figure is before returns, postage, etc. So if you've done 90k of sales full stop, before returns, any eBay fees etc then yes, that exceeds VAT limit. 

A business could have 100% returns rate and still have to register for VAT if their sales are 90k+. You can't just knock off a return as no sale, it counts. 

The only thing I'm not too sure of with eBay is cancelled sales. I.e buyer accepts offer, doesn't pay and it has to be cancelled. Or they pay and then request to cancel before it is sent. I would hazard a guess that at very least the latter does count towards VAT threshold. 

[twofourdeltasurplus]

It's only just over 90K when you include returns. 

Those returns are sales, so you are over the threshold, no ifs, no buts

[btr.style]

With that in light, it's very wise you get in touch with HMRC for VAT registration right away. Not doing so will just be a whole heap of trouble and not knowing because you wrongly deducted returns is no excuse I'm afraid. They'll come down heavy as VAT avoidance is at the top of their list right now and it's too late now to do anything but comply and register. eBay certainly won't let you trade again on their platform until you do and contacting HMRC is the only way forward. 

The rules aren't always fair or right but it's the way it is with the law and 'I didn't know' won't cut it. It's your responsibility as a business trader to know it like the back of your hand. 

[btr.style · Accepted solution]

Oh and there is something where you can apply to HMRC basically promising and showing proof you won't exceed the threshold again any time soon. 

The problem is, as documented by eBay members here who it's happened to, eBay often require proof of this which HMRC don't provide and so they've had to just give up trading altogether on eBay. 

[dch2112011]

Take a step back and embrace your success - this is leading to VAT registration bearing in mind that if you add any sales anywhere else - car boot, local pub, facebook etsy  etc etc these all add to VAT registration.

The up side is you claim back VAT on your purchases and eligible expenses which reduces overhead and purchase cost - this is the balance against collecting VAT for HMRC on your sales.

 A word to the wise

- you have probably already drawn attention to your  turnover levels and are tempting a compliance check  which may uncover any other sales outlets you have - and if HMRC do decide to carry out a check and they believe you are avoiding VAT they can estimate the VAT owed going back for several years  irrespective if you have charged it or not  - if they get into it - the next thing to come along will be a tax investigation.

Of course if your total sales remain under the threshold and you can prove it - you have absolutely nothing to worry about  

[ojewellery]

For jewellery retail June/ July are traditionally the quietest months of the year and you're doing great numbers.  You could turn on the brakes or sit down and look hard at your numbers as to whether you're limiting yourself from flying by staying below the threshold.  I'm another Jewellery seller and my November is typically 3 times July, December maybe 4 times.

There's great software that does a lot of the legwork for VAT administration importing your sales data from online marketplaces like linkmy books and Xero

Its not necessarily as scary as it first seams and you can claim back VAT paid out on current stock that softens the initial blow of having to pay VAT. 

Plenty on the boards will be happy to talk you through the systems they use to administer their VAT.  

[affordable-luxury]

That's fine. Thanks everyone for the information. I will register again for VAT. I was registered before then my sales dropped and I was de registered, so I will just have to register again.

[dch2112011]

Well done for picking your sales up again - quite an achievement in this day and age - you obviously know your stuff - VAT an inevitable sign of your success -  

You obviously have an eye to business but maybe just hate the administration ! 

[btr.style]

"You could turn on the brakes or sit down and look hard at your numbers as to whether you're limiting yourself from flying by staying below the threshold"

It's too late now, they have exceeded it. They've turned over in excess of 90k but wrongly knocked returns off that figure to make them under (when returns doesn't reduce turnover for VAT limits). They need to act with HMRC or eBay just won't let them sell on the platform anymore.

[affordable-luxury]

That's fine I will reregister tomorrow. I was registered then had to deregister. Thanks for the help.

[btr.style]

Ty for the accepted answer. 

Not good news I know but we all have to be honest here. No other way of putting it. eBay's system at dealing with 1 off exceeding isn't too good as they require paperwork that doesn't exist (even if confirmed with HMRC). So it's a case of too late to do anything else now apart from register. 

[affordable-luxury]

Yes you have been very helpful. You seriously know your stuff. Best wishes 

[optica-techna]

I HAVE HAD THE EXACT SAME THING!

[isaa-shaza]

Do they only ask when you hit £90k or just about when you’re going to hit 90k

[isaa-shaza]

Does it only ask you when you do £90k nothing less?

[isaa-shaza]

did the ask you the minute it hit 90k including returns?

[papso22]

As you have already been advised, they will probably ask you  before you get too near to 90,000.

Quite when is a mystery.