From the 1st of August Ebay will now be charging business sellers VAT for the first time, which introduces a number of potential issues for ebay traders.
This means that when you receive an invoice from ebay from this month on, it will have an extra 20% in VAT added to it. While on paper this isn’t a problem for businesses that are already VAT registered it does present a problem for businesses who aren’t registered and are unable to claim back the VAT they pay ebay.
This effectively means that there will be a hefty increase in costs for smaller ebay traders that aren’t VAT registered. If you do happen to belong to this group and there are many thousands of individuals who do, then you will need to adjust margins to compensate or face a reduction in your profits.
Even for businesses that are VAT registered there may be some potential issues with vat having to be paid to ebay monthly and then claimed back by businesses quarterly. Clearly this will put a squeeze on cashflow for some.
If you require advice on VAT on ebay or registering your business for VAT and other issues, contact us today.