Should I be paying VAT? UK business seller

[zanediamonte]

I'm a small time business seller in the UK (mainly books). I have just noticed that Ebay have been taking 20% VAT from me in addition to the Final Value Fee, etc. The VAT threshold is £90,000 and my annual sales come to about £10,000. I am not VAT registered so, as I understand it, I should not therefore be paying VAT.

My latest sale was a set of six placemates, £45.00 including postage. The fees were listed as follows:

Final Value Fee - £5.36

Regulatory Operating Fee - £0.16

TOTAL FEES FOR ITEM - £5.52

Then:

Final Value Fee (per-order Fixed amount) - £0.30

Then:

TOTAL FEES - £5.82

VAT (20%) - £1.16

TOTAL FEES (including VAT) - £6.98

So, my order earnings come in at £38.02

I spoke to "an advisor" whose understanding of the UK tax system was even less than mine, but got absolutely nowhere.

Can anyone tell me if I should be paying this 20% VAT or not, and if I should is it possible (bearing in mind that I am not VAT registered) for me to claim it back?

Thanks in advance to anyone who ploughs through all this and can give me an answer!

[jonatjonatjonat · Accepted solution]

Not being VAT registered doesn't mean you don't pay VAT on things you buy for your business. What it means is you don't have a VAT bill to HMRC.

You are being charged VAT on ebays fees. Ebay are VAT registered - so have to present this.

In short - yes, you should be paying it and no, you can't currently claim it back. 

[zanediamonte]

Okay, thanks for clearing that up for me.