Flat Rate Scheme for Non-Established Seller Selling at Online Marketplace

Hi, I have a question. A non-established seller who stores its home, kitchen and garden items at online marketplace (OMP) warehouse in UK and sells. Can he apply join Flat Rate Scheme, knowing that the sales between the seller and OMP will be zero-rated (Deemed Supply)? Thanks

"Any sales a seller makes through an online marketplace, where the online marketplace is liable to account for the VAT, will not be included in the Flat Rate Scheme calculation from 1 January 2021". (url=https://www.gov.uk/guidance/vat-and-overseas-goods-sold-directly-to-customers-in-the-uk#the-flat-rate-scheme) Flat Rate Scheme (/url)

Hi Amazo,
A vat registered business may apply to join the flat rate scheme where it meets the conditions in notice 733 (Flat Rate Scheme for small businesses (VAT Notice 733))
However if a business is only making zero rated supplies they would end up paying VAT to HMRC on supplies where they are not collecting VAT and as such the business may be losing money by being on the flat rate scheme.
Thank you.

 

Thanks for your response. I have 1 confusion. 1 - As per statement given on (https://www.gov.uk/guidance/charging-vat-when-using-an-online-marketplace-to-sell-goods-to-customers-in-the-uk#the-flat-rate-scheme) The Flat Rate Scheme: If you use the Flat Rate Scheme, any sales you make where the online marketplace or business customer is liable to account for the VAT, will not be included in the Flat Rate Scheme calculation. 1 - As per statement given on (https://www.gov.uk/guidance/charging-vat-when-using-an-online-marketplace-to-sell-goods-to-customers-in-the-uk#the-flat-rate-scheme) The Flat Rate Scheme: If you use the Flat Rate Scheme, any sales you make where the online marketplace or business customer is liable to account for the VAT, will not be included in the Flat Rate Scheme calculation. 1 - As per statement given on (https://www.gov.uk/guidance/charging-vat-when-using-an-online-marketplace-to-sell-goods-to-customers-in-the-uk#the-flat-rate-scheme) The Flat Rate Scheme: If you use the Flat Rate Scheme, any sales you make where the online marketplace or business customer is liable to account for the VAT, will not be included in the Flat Rate Scheme calculation. 2- As per statement given on (https://www.gov.uk/guidance/flat-rate-scheme-for-small-businesses-vat-notice-733--2#:~:text=Your%20flat%20rate%20turnover%20is,rate%20and%20reduced%20rate%20supplies Your flat rate turnover is all the supplies your business makes, including VAT. This means all of the following: the VAT inclusive sales and takings for standard rate, zero rate and reduced rate supplies Now as per statement 1, sales made by overseas through online marketplace shall not be included in the FRS from 2021, whereas statement 2 does not mention about exclusion of these sales from FRS. Can you please confirm which shall we include sales a seller makes through an online marketplace, where the online marketplace is liable to account for the VAT in total turnover while calculating for FRS or not? Thanks

According to VN733 a seller, who makes sales through an online market place to consumers in the UK and where the OMP accounts for the VAT, can include these sales in the FRS calculation (or rather it doesn't say you can't as far as I can see). However, the guidance at "vat-and-overseas-goods-sold-directly-to-customers-in-the-uk#the-flat-rate-scheme" these sales "will not" be included in the calculation. HMRC: Should these sales be strictly excluded from the calculation? or is it voluntary because, as you say above, the seller would be paying VAT on ZR sales? Does the guidance need amending to make this clearer either way? Many thanks

I think I've posted too early - I missed Amazos query as it was being moderated.

Hi.

The Flat Rate Scheme Notice 733 outlines the mechanics of the Flat Rate Scheme and provides a list of what to include in your Flat Rate turnover.

However the guidance below is specific to use of the Flat rate Scheme where an online marketplace is reponsible for accounting on the VAT for the goods:

The Flat Rate Scheme

If you sell goods as an overseas trader and the marketplace are responsible for accounting for the VAT then you will not include these sales as part of the Flat Rate Scheme calculations

The Flat Rate Scheme prevents you from being able to recover VAT as input tax on non capital expenditure goods so it is always recommended to perform calculations to help decide whether being on the Flat Rate Scheme benefits your business.

Thank you.

Hi PeterVAT,

The Flat Rate Scheme Notice 733 outlines the the mechanics of the Flat Rate Scheme and provides a list of what to include in your Flat Rate turnover.

However the guidance below is specific to use of the Flat rate Scheme where an online marketplace is reponsible for accounting on the VAT for the goods:

The Flat Rate Scheme

If you sell goods as an overseas trader and the marketplace are responsible for accounting for the VAT then you will not include these sales as part of the Flat Rate Scheme calculations

The Flat Rate Scheme prevents you from being able to recover VAT as input tax on non capital expenditure goods so it is always recommended to perform calculations to help decide whether being on the Flat Rate Scheme benefits your business.

Thank you.

Hi there, Hello, does the term 'overseas trader' refer to not having a company in the UK? Is this applicable to individuals who have a company and VAT registration in the UK but live in another country Many thanks

Hi atahan150,
It would largely depend upon the situation in which this term is being used. There are non-established taxable persons who are VAT registered in the UK that you may not deem to be oversees traders even though they do not live or have a company here. 
Thank you.