Vat Number Required but under threshold

[arny51]

Hi all,

Last year in May 2023 I received an email from eBay telling me I needed to provide a VAT number as I'd breached the £85,000 threshold and if I didn't I would have my account restricted. 

Following a long 4 months I managed to have HMRC grant me and exception on 29th September after which the UK business compliance team granted me a temporary 12 month removal of restriction  as opposed to a full removal. 

Fast forward to this year exactly a year to the day it was removed I received the same email albeit the email cited the new £90,000 threshold. This year though, my rolling 12 month turnover is under the £90,000 threshold (83k rounded) but my account is still suggesting that it will be restricted on October 30th.

Unfortunately I've been struggling with getting replies from the compliance team, I've since emailed  HMRC with my figures and forecast since my exception was granted and they have replied by post that I do not need to be applying for an exception or be registed for VAT yet I seem to still be in this predicament.

Every advisor I speak to tells me wrong information, one told me ALL business accounts legally have to have a VAT number and she claimed to be from the specialist team too. A check of eBay policy dispels this myth. A further advisor said it's not eBay chasing me but in fact HMRC are chasing them because they accumulate all accounts and platforms I sell on which is not true and HMRC confirmed it not to be true, baring in mind my only account I sell on is this and I don't use any other platform.

I am currently at a loss as to what to do and any help would be appreciated.

Thanks 

Arny51

[dch2112011]

This could explain why you need to register

Distance sales need to register because the value of your distance sales in the year or part year from 1 January went over the distance sales threshold the date that your sales exceeded the threshold

The current distance selling threshold is £70,000. It's based on sales made during a calendar year from 1 January to 31 December. This limit has not changed since it was introduced on 1 January 1993.

see link below section 3.1

vat thresholds 

[txt.ltd]

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@dch2112011 wrote:

This could explain why you need to register

Distance sales need to register because the value of your distance sales in the year or part year from 1 January went over the distance sales threshold the date that your sales exceeded the threshold

The current distance selling threshold is £70,000. It's based on sales made during a calendar year from 1 January to 31 December. This limit has not changed since it was introduced on 1 January 1993.

see link below section 3.1

vat thresholds 

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Wow, I never knew about that. Thanks.

[arny51]

Hi, 

Thanks for this, I was certain it was below but I did check for sanity and it's just over £5,000 that's been sold.

I'm certain it's the temporary unrestriction by eBay coming to an end following 12 months but it's a whole other ball game communicating with the correct person and providing the HMRC letter as well.

Thanks for your reply you've made me aware of something I didn't know! 

[dch2112011]

Customs and excise collaborate with ebay - rather the other way round - I am fairly certain that when an account reaches a certain limit the automated system sparks the messages to your account, this is something that the frontline CS agents may not fully understand and any queeries have to be passed back to be dealt with by the appropriate back room team who are in the know - so to speak.

Check your letter to see if you have been granted an exception or an exemption - they are totally different - an exception is where you have convinced HMRC that you will not go above the threshold by the year end due to one off circumstances and has to be renewed every twelve months - HMRC decide whether to compulsory register you or allow a further exception.

An exemption is where you have proved that because for example all of your sales are zero rated or exempt that you will never collect VAT and therefore an exemption is granted indefinately.

either way you should register if the situations change.

The Joys of VAT 

[dch2112011]

Have you noticed on your istings it states you will provide vat invoices but there is no registration number ?

Not sure this is entirely relevant but I thought the invoice statement only appeared when registered and declared ?

[arny51]

Hi, 

Thanks again and I hope it's someone with the correct knowledge as I've spoke to a few reps citing incorrect information thus far. 

I have had a  granted exception last year as mentioned in my original post and since then I have consciously kept 10% below the threshold as it works for me with regards to my business and circumstances. This year the letter I have explained that I don't need to request an exception or be registered for VAT as my rolling 12 month figures  are under the threshold.

That's why I am at a loss as this whole charade has been triggered automatically due to the 12 month temporary removal of restrictions on my eBay account have come to an end.

Thanks 

[dch2112011]

My experiance of ebay was trying to get them to remove restriction threats after registering for VAT - it took a while they removed them then after a while they reappeared - no help from ebay - except to manually adjust until the next search by the bots flagged it up.

I eventually after 12 months found out why because the VAT registration name was different to the ebay account - changed the name on the VAT registration and problem went away - this was way before managed payments ! 

The front line CS couldn't find out why it was happening - they did not have intimate knowledge of how the algorithms work or what they look for or what the automated responses relate to - the back room team should if you can get them to look into it when they get to it in the pile of escalated requests !

[dch2112011]

I read you had the exception for 12 months - just thought I would check because many members get exceptions and exemptions totally confused, so much so that it is not worth getting involved with the abuse that flies around.

HMRC have given you the correct advice as far as I can see -

I assume the collaboration between HMRC and ebay is Jan to Dec with the 70k limit but getting that confirmed would be extremely difficult for us mere mortals.  

[4_bathrooms]

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@dch2112011 wrote:

The current distance selling threshold is £70,000. It's based on sales made during a calendar year from 1 January to 31 December. This limit has not changed since it was introduced on 1 January 1993.

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That is actually outdated information. The "distance selling threshold" applied to non-UK established EU sellers making distance sales to the UK prior to Brexit. For example; if a Spanish seller sold £70,000 of goods and/or services to the UK within a calendar year they were required to register for VAT in the UK.

I'm surprised HMRC have overlooked that one the last few times they have updated the page (I had a feeling the "calendar year" timescale was an EU construct). This (no longer relevant) page on Avalara shows the intra-EU distance selling registration thresholds prior to their withdrawal in 2021. This archived version of the same page from 2019 shows the UK's intra-EU distance selling threshold was £70,000 prior to Brexit.     

[dch2112011]

Strange that this notice for he 70k threshold is showing as updated 10th  July 2024  and is showing as current and live on the Gov.uk website under BUSINESS  tax -  VAT  and is the directed  to document by HMRC for thresholds !

The 70K was introduced back on 1st Jan  1993 and is still being voiced as current by hmrc

Who should register for VAT 2024 

[4_bathrooms]

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@arny51 wrote:

Last year in May 2023 I received an email from eBay telling me I needed to provide a VAT number as I'd breached the £85,000 threshold and if I didn't I would have my account restricted. 

Following a long 4 months I managed to have HMRC grant me and exception on 29th September after which the UK business compliance team granted me a temporary 12 month removal of restriction  as opposed to a full removal. 

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It sounds like you did cross the registration threshold last year and eBay (correctly) requested a VAT number. However, HMRC subsequently granted you an exception as you were able to provide evidence your turnover would be below the deregistration threshold during the following 12 months. Is that correct?

If so, eBay has huge problems with things like this. You should only need to provide the letter you have received from HMRC confirming you do not need to register. Many posters on these boards have struggled to convince eBay they do not need to be registered for VAT following deregistration (for example). It doesn't help that many of the customer service agents you will speak to have no idea what VAT is and will often request a document that doesn't exist. VAT is something that gets eBay all paranoid as HMRC holds eBay jointly and severally liable for the VAT obligations of it's sellers. 

[dch2112011]

It is little wonder VAT is confusing even the HMRC internal manual  linked to from HMRC  to explain VAT DISTANCE SELLING  updated  5th OCT 2023  links you back to the same threshold limit document

https://www.gov.uk/hmrc-internal-manuals/vat-place-of-supply-goods/vatposg3510 

It seems that HMRC describe Distance selling  and Distance sales in the UK as different entities  as you correctly pointed out -  but if both internally and externally they recently update and refer to thresholds not in effect it is little wonder why HMRC, ebay and people following HMRC advice get it all mixed up.

[4_bathrooms]

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@dch2112011 wrote:

The 70K was introduced back on 1st Jan  1993 and is still being voiced as current by hmrc

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The thing to remember is "distance selling" wasn't a widely recognised phrase in 1993; it mostly referred to a business in one EU country selling to businesses located in another EU country. In 1993 the internet barely existed outside academic and military institutions whilst items purchased via mail order were covered under existing consumer legislation. The Consumer Protection (Distance Selling) Regulations didn't come into force until 2000 - most people had never heard the phrase "distance selling" before then.

However, it appears it's not a complete oversight. If you check the referenced form (VAT1A) it specifically concerns distance sales from the EU to Northern Ireland. A UK-established business only needs to observe the £90,000 registration threshold.

[sheba-knows-best]

I know nothing. So I use a firm of accountants. And over the last twelve years, three different accountants  (two were partners) have been happy with the 85K threshold (90k this year).

[myriad*seller]

I think eBay calculate VAT on a monthly basis and not a 12 month basis 

So if you sell 1/12th of the VAT threshold in a month this triggers the VAT registration thing from eBay

This is because, if they don't, and you manage to evade VAT, then EBAY have to pay your VAT bill to HMRC (they are jointly and severally liable for YOUR VAT by law), so they don't take any chances that could cost eBay money! 

[isaa-shaza]

Is it a calendar year or rolling year I was told rolling

[arny51]

Rolling

[isaa-shaza]

I’m in £76k, will they ask me the minute I hit over £85k?