Selling on Amazon UK offers non-UK businesses access to one of the world’s most mature and competitive e-commerce markets. However, alongside the commercial opportunity come VAT obligations that many overseas sellers underestimate or misunderstand.
UK VAT rules apply differently to businesses that are not established in the UK. These sellers are typically treated as Non-Established Taxable Persons (NETPs), a classification that carries stricter registration requirements and removes the benefit of the standard UK VAT threshold. As a result, VAT registration may be required well before many international sellers expect, often from the first sale or even before inventory is stored in the UK.
The complexity increases further for Amazon sellers using Fulfillment by Amazon (FBA), importing goods into the UK, or relying on marketplace VAT collection rules. While Amazon may account for VAT in certain scenarios, this does not automatically eliminate a seller’s responsibility to register, report, and remain compliant with HMRC regulations.
This guide explains when non-UK Amazon sellers must register for UK VAT, how the NETP rules apply, and the compliance obligations that follow registration. By understanding these rules early, overseas businesses can avoid costly mistakes, unexpected VAT liabilities, and potential disruptions to their Amazon account.
Do Non-UK Amazon Sellers Have a VAT Threshold?
One of the most common misunderstandings among overseas Amazon sellers is the belief that the standard UK VAT registration threshold applies to them. Many non-UK businesses assume they can begin selling on Amazon.co.uk and only register for VAT once their sales exceed £90,000. This assumption is incorrect for businesses treated as Non-Established Taxable Persons (NETPs).
Unlike UK-established businesses, NETPs do not benefit from a VAT registration threshold. HMRC requires non-UK-established businesses to register for UK VAT as soon as they make, or intend to make, any taxable supplies in the UK. This means that even a single sale, regardless of value, can create a VAT registration obligation.
For Amazon sellers, this rule is particularly significant. VAT registration may be required from the moment you begin selling to UK customers, or even earlier if you plan to store goods in UK fulfilment centres such as Amazon FBA warehouses. Waiting for turnover to increase is not permitted under NETP rules.
This absence of a threshold often catches overseas sellers by surprise. Businesses that delay registration due to incorrect assumptions may later incur backdated VAT liabilities, penalties, and interest. Understanding that NETPs must register from the first taxable supply is therefore essential for maintaining compliance and avoiding costly corrections.
When Must an Amazon Seller Register for UK VAT?
For non-UK Amazon sellers, determining the right moment to register for UK VAT is one of the most important compliance considerations. Unlike UK-established businesses, where registration is linked to turnover thresholds, NETPs are required to register based on taxable activity. This distinction means VAT obligations can arise much earlier than many overseas sellers expect.
Failure to register on time can result in significant consequences, including backdated VAT liabilities, penalties, interest charges, and potential disruption to an Amazon seller account. Understanding the key triggers is therefore essential.
Storing Goods in the UK (Amazon FBA)
VAT registration is typically required before goods are stored in the UK. When a non-UK seller sends inventory to Amazon fulfilment centres, the goods are treated as being located within the UK. Any subsequent sales of that stock are treated as UK domestic supplies and fall within the scope of UK VAT.
Importantly, the obligation may arise even if no sales have yet taken place. The act of positioning stock in the UK with the intention of making taxable supplies is generally sufficient to trigger registration requirements. Many overseas sellers mistakenly believe VAT registration can wait until products are sold, but HMRC expects compliance from the point UK trading activity begins.
This rule applies regardless of the scale of operations. Whether a seller stores a small test shipment or a large volume of inventory, the VAT treatment remains the same.
Selling Goods to UK Customers from Overseas
Non-UK sellers shipping goods directly to UK consumers may also trigger VAT obligations from the first sale. The VAT treatment depends on several factors, including the location of the goods at the time of sale, the value of the consignment, and whether an online marketplace is involved.
Since the introduction of the £135 consignment value threshold, VAT on low-value goods is generally charged at the point of sale rather than collected at import. In many cases where Amazon facilitates the transaction, the marketplace may be treated as the deemed supplier and responsible for VAT collection.
However, sellers should exercise caution. Marketplace VAT collection rules do not automatically remove all VAT responsibilities. Registration may still be required where sellers make other UK-taxable supplies, import goods, or hold stock within the UK.
Importing Goods into the UK
VAT registration is often required when importing goods into the UK. Import VAT is typically due upon entry of goods into the country, and registration enables businesses to manage this liability more efficiently.
A VAT-registered seller may be able to:
- Use Postponed VAT Accounting (PVA) to avoid upfront VAT payments
- Recover eligible import VAT
- Correctly declare VAT on returns
Without VAT registration, import VAT frequently becomes an immediate cost, which can significantly affect cash flow and profitability.
Additionally, importing goods before VAT registration can create administrative complications, including difficulties in retrospectively reclaiming VAT.
Selling Through Amazon Marketplace
Many overseas sellers assume that Amazon’s VAT collection mechanisms eliminate the need for VAT registration. While Amazon may indeed account for VAT in specific circumstances — particularly for low-value B2C sales, this treatment is transaction-specific, not seller-specific.
VAT registration may still be required where the seller:
- Stores goods in UK fulfilment centres
- Imports goods into the UK
- Makes UK domestic supplies
- Sells outside the marketplace, deemed supplier rules
Each selling structure must therefore be reviewed carefully rather than relying on broad assumptions.
Intention to Make Taxable Supplies
VAT registration obligations do not only arise after trading begins. HMRC rules also apply where a business intends to make taxable supplies in the UK. For example, if a non-UK Amazon seller plans to launch UK sales, import goods, or send stock to FBA warehouses, advance registration may be required.
Proactive registration helps ensure:
- Correct VAT treatment from day one
- Avoidance of retrospective liabilities
- Smooth Amazon compliance checks
Why Timing Is Critical
NETPs are required to notify HMRC of their liability to register within prescribed deadlines. Delays can result in:
- Backdated VAT assessments
- Penalties for failure to notify
- Interest on unpaid VAT
For Amazon sellers, late registration can also create account health risks, including listing suspensions or withheld funds.
How to Register for VAT as a Non-UK Amazon Seller
Confirm your NETP status.
Before starting the VAT registration process, a non-UK Amazon seller should first establish whether the business qualifies as a Non-Established Taxable Person (NETP). This generally applies where the business is based outside the UK, has no fixed establishment in the UK, and makes, or intends to make, taxable supplies in the UK, such as selling through Amazon.co.uk or storing goods in UK fulfilment centres. Correctly identifying NETP status is important because it determines how HMRC applies VAT registration rules.
Gather the required business information.
HMRC requires detailed information to process a VAT application. Sellers should prepare their legal business name, principal place of business (which must be outside the UK), business registration documents, tax identification number from their home country, and a clear description of UK trading activities. Details regarding the date of the first taxable supply or intended start of UK sales are also necessary. Providing accurate and consistent information reduces the likelihood of delays or additional verification checks.
Submit the VAT registration application.
Non-UK Amazon sellers may apply through HMRC’s online VAT registration system or by submitting a VAT1 form by post. When using the online route, sellers must take care to select the correct entity type, typically “non-UK company,” to avoid misclassification. Errors at this stage can lead to incorrect registration processing, which may later require amendments and extend compliance risks.
Respond to HMRC verification requests.
HMRC frequently conducts checks for overseas applicants to confirm identity, business legitimacy, and trading intentions. Sellers may be asked to provide supporting documentation, such as proof of business activity, director identification, or evidence of sales channels. Prompt and complete responses help prevent unnecessary registration delays.
Receive and activate the VAT registration.
Once the application is approved, HMRC issues a UK VAT number and a registration certificate, including the registration’s effective date. From this point onward, the seller must charge VAT where applicable, maintain compliant VAT records, and submit VAT returns in accordance with HMRC rules.
Update Amazon Seller Central and compliance systems.
After obtaining a VAT number, sellers should immediately update their VAT details within Amazon Seller Central and review VAT calculation settings. It is equally important to implement appropriate accounting and record-keeping systems, ideally using Making Tax Digital (MTD)-compatible software. Many non-UK sellers appoint a VAT agent to manage filings and ensure ongoing compliance.
Ongoing VAT Compliance Obligations
Filing VAT returns.
Once registered for UK VAT, a non-UK Amazon seller must submit VAT returns to HMRC, typically every quarter. These returns must include details of VAT charged on sales, VAT incurred on purchases, and the resulting liability or repayment position. Even where no sales or purchases occur during a period, a “nil return” is still required. Missing filing deadlines can lead to penalties, interest, and increased scrutiny from HMRC.
Complying with Making Tax Digital (MTD).
All VAT-registered businesses, including non-established taxable persons, are required to comply with Making Tax Digital for VAT. This means maintaining digital records and submitting VAT returns using HMRC-recognized MTD-compatible software. Manual submissions through HMRC’s older portal are no longer permitted. Sellers must ensure their accounting systems, or those of their appointed agent, meet MTD requirements.
Maintaining proper VAT records.
VAT-registered sellers are required to keep comprehensive records to support the figures reported on VAT returns. These typically include sales invoices, purchase invoices, import documentation, and Amazon transaction reports. HMRC generally requires VAT records to be retained for at least six years. Inadequate or inaccurate record-keeping can trigger compliance checks and potential penalties.
Charging the correct VAT rates.
Non-UK Amazon sellers must apply the appropriate UK VAT treatment to their supplies. While many goods are standard-rated at 20%, some products may qualify for reduced or zero rates depending on their nature. Incorrect VAT treatment, whether undercharging or overcharging, can create financial exposure and compliance issues. Sellers should periodically review their VAT settings within Amazon and their accounting systems.
Accounting for import VAT.
When goods are imported into the UK, import VAT must be accounted for correctly. VAT-registered sellers may use Postponed VAT Accounting (PVA), allowing import VAT to be declared and recovered on the same VAT return, improving cash flow. Errors in import VAT reporting are a common cause of HMRC inquiries, particularly for overseas e-commerce businesses.
Paying VAT liabilities on time.
Any VAT due to HMRC must be paid by the deadline specified on the VAT return. Late payments may result in interest charges and default penalties. Sellers should ensure appropriate cash flow planning, especially where VAT is collected via Amazon, but payment obligations remain with the seller.
Common Mistakes Made by Non-UK Amazon Sellers
Assuming the UK VAT threshold applies.
One of the most frequent and costly mistakes is believing that the £90,000 VAT registration threshold applies to overseas sellers. Non-Established Taxable Persons (NETPs) are not entitled to this threshold and are required to register from the first taxable supply. Many sellers only discover this after trading for months or years, resulting in unexpected backdated VAT liabilities.
Delaying VAT registration.
Some sellers are aware of VAT obligations but postpone registration due to administrative concerns or the expectation of low sales volumes. However, HMRC may assess VAT retrospectively, along with interest and penalties. Late registration can significantly impact profitability, particularly where VAT was not charged to customers.
Believing Amazon handles all VAT responsibilities.
While Amazon may collect and remit VAT in certain scenarios, especially under deemed supplier rules, this does not automatically remove the seller’s obligation to register or comply with VAT regulations. Sellers who rely entirely on marketplace mechanisms without understanding their own position often face compliance gaps.
Ignoring import VAT implications.
Non-UK sellers importing goods into the UK sometimes overlook the financial impact of import VAT. Without VAT registration, import VAT may be unrecoverable. Even VAT-registered sellers may encounter issues if postponed VAT accounting is not applied correctly.
Applying incorrect VAT rates.
Misclassification of goods or misunderstanding of VAT liability can lead to incorrect VAT treatment. Charging the wrong rate or failing to charge VAT where required exposes sellers to HMRC assessments and potential penalties. Errors may also distort pricing strategies and margins.
Poor record-keeping and bookkeeping.
Incomplete sales records, missing invoices, or failure to reconcile Amazon reports are common issues. HMRC requires VAT records to be retained for at least six years, and inadequate documentation can complicate VAT returns, audits, and investigations.
Misunderstanding digital and cross-border VAT rules.
Sellers offering digital products or operating across multiple jurisdictions sometimes misapply VAT rules relating to customer location and place of supply. These errors are particularly common among businesses expanding internationally without specialist VAT advice.
Conclusion
Selling on Amazon UK as a non-UK business presents significant commercial opportunities, but it also introduces VAT obligations that cannot be overlooked. The classification of overseas sellers as Non-Established Taxable Persons (NETPs) means that the familiar UK VAT registration threshold does not apply, and registration may be required from the very first taxable supply or even before goods are stored in the UK.
Many compliance issues arise not from deliberate avoidance but from misunderstanding the rules. Assumptions that VAT registration can wait, that Amazon handles all VAT responsibilities, or that low sales volumes eliminate risk frequently lead to backdated VAT liabilities, penalties, and operational disruption. For businesses importing goods or using Amazon FBA, the financial consequences of incorrect VAT treatment can be particularly severe.
Proactive VAT registration and robust compliance processes are therefore essential. Maintaining accurate records, applying the correct VAT rates, meeting Making Tax Digital requirements, and monitoring import VAT obligations all form part of a seller’s ongoing responsibilities. Addressing these requirements early enables overseas businesses to operate with confidence, protect profit margins, and avoid costly corrections.
Ultimately, understanding UK VAT rules is not simply about tax compliance; it is about safeguarding the stability and long-term growth of your Amazon business in the UK market.
