What Are My Chances?

[Elton]

I don't hold out much hope - looks like a 'misunderstanding' by my accountant may cost me a lot of money, which I don't have.

 

My email below should explain what I mean

 

Home > Help > VAT Identification Number > VAT Identification Number

 

Message: Hi,

 

I have two accounts on ebay for trading, both of which operate under the same VAT number and are now registered with you as being exempt from VAT on fees.

 

When I tried registering my VAT number with you a few years ago, the sytem would not accept it, although it worked first time this time, so I have been reclaming the VAT in my tax return here in the UK.

 

Following an inspection by HM Customs & Excise, I have been informed that this is incorrect and that I must pay them back the reclaimed VAT and recover the VAT paid from yourselves.

 

Can you please explain to me the procedure for doing this?

 

Many thanks,

 

Elton Murphy

[RobStubbs]

Good luck is all I'd say. You'd probably stand more chance suing your accountant, and he may even be insured against that sort of thing.

 

Rob.

[UK-Fishing-Tackle.co.uk]

I think customs are talking rubbish elton - simply put last time I checked my seller account (which is basically once a quarter for reasons like yourself) I receive VAT invoices. Yes, eBay do have a self-billing arrangement (as do Google for example) where they can EXEMPT a VAT registered business from paying VAT -but- the rules on VAT are very black and white, and thats if you present a valid VAT invoice, and you are VAT registered then you can reclaim the VAT - there is simply no way out of that.

 

The eBay invoice shows their Trading name, address, European VAT number, a separate VAT amount an invoice number, your customer address and an invoice date (the pre-requisites of a VAT invoice) hence the VAT man should have no arguments.

 

SOUND LIKE THE TAX OFFICE TRYING TO BASICALLY MAKE THEMSELVES LESS WORK. If you put the onus on businesses like eBay to manage the VAT aspects of their customers then it means the tax man only has to check one place (not several thousand merchants).

 

However, the principles of taxation are that you've paid VAT on a valid VAT invoice and as a business with a VAT number you can get it back. Let them argue it legally - but I think they'll struggle.

 

My mums a proper accountant and has dealt with the VAT office on huge accounts - I'll ask her what she thinks and let you know.

[UK-Fishing-Tackle.co.uk]

Emailed mum, says she'll look into it tomorrow for you (well it affects us as well). On the basis that eBay charge VAT on the prevailing rate (i.e. 17.5% for UK, 21% for Ireland) we suspect they must account for in said member states, and therefore the invoice is valid (unlike say a German invoice where you must Zero rate it for a business in the UK or the UK business has to reclaim it from Germany).

[Elton]

Hi Ian,

 

It will be interesting to see what you can find out.

 

This page - http://pages.ebay.co.uk/vat-landing/general/ - states: "Business sellers typically will not be able to reclaim VAT paid on eBay fees from their local VAT authorities. Sellers who use their eBay accounts for business purposes only and want VAT exemption on eBay must first submit their VAT ID numbers to eBay. "

[Elton]

Just in case anyone else is interested in this, especially if you've reclaimed VAT on ebay fees, here's the latest from ebay and my reply below. I don't think I'm doing anything wrong by publishing them here, as there's nothing 'secret' in them and it may help others:

 

Ebay's reply:

Hello Elton,

 

Thank you for writing to us. I appreciate the opportunity to assist you with your concern about the VAT fees.

 

Elton, VAT registered members will not be able to claim VAT back from their local Tax Authorities on any eBay invoice which includes VAT. Thisis because eBay International A.G., the company that provides the ebay.co.uk service, is located outside the European Union.Therefore VAT Registered members should submit a valid VAT ID number to eBay as soon as possible. Otherwise, these members may have to pay VAT that cannot be recovered. Our system makes it easier for VAT-registered businesses, because we will not charge VAT in the first place, meaning businesses donot need to use administrative resources to claim back the charged VAT.

 

I trust this information is helpful and wish you all the best for your future trading on eBay.

 

Kind regards,

 

***** ******

eBay Customer Support

My reply:

Hi *****,

 

What you say is interesting. The following is a quote from the letter Ihave here from H.M Revenue & Customs. I have copied this reply to bothmy accountant AND H.M. Customs:

 

"I can confirm that Ebay is a Swiss company providing electronic services in the UK. They have used the simplification method to account for tax on EU supplies by registering for all EU VAT in Holland.

 

Ebay should charge tax on electronic services supplied to individuals, *not* to businesses (whether or not registered for VAT) see VAT ACct 94, sch 3B, Part 1 Registration Para 3 Qualifying Supplies.

 

UK Businesses should account for the tax on electronic services received as a reverse charge.

 

For non-VAT-registered businesses the value of the Ebay fees counts towards the taxable turnover for registration purposes.

 

**The tax charged on Ebay fees is not recoverable as input tax but the tax due should be accounted for as a reverse charge.**

 

Where Ebay has charged tax, the trader should request a credit note from Ebay. And account for the charge as both input tax and output tax."

 

The letter goes on to state that H.M. Revenue & Customs now wish to recover this sum from me, as it isn't UK VAT. The sum is £808.18

 

I hope that now I have included HM Revenue & Customs in this email, the issue can be resolved. As it stands, I seem to be stuck in the middle of some misunderstanding here and, as a result, am expected to pay £808 for the pleasure.

 

All I have tried to do all along is operate a legitimate and honest business and £808 is a lot of money to me.

 

I look forward to receiving your reply.

 

Yours sincerely,

 

Elton Murphy

[Ken Davison South Wales]

VAT and Income taxes are a joke.

 

I have just been informed after complaining like hell to my accountants that I have over paid by £8776.00p due to a cockup in 2004, this sum will be refunded but my accounts think I should be over joyed.

 

I am not I pay them to do a job and as I see it they failed so I will now be looking for a new accountant.

[Elton]

Interestingly, I just got the following mass mailout from ebay:

 

With effect from March 1st, 2007, we are updating the eBay.co.uk User Agreement and Privacy Policy.

 

The main change is that for eBay users who are resident in the European Union, the contractual relationship between those users and eBay International AG will be transferred to eBay Europe S.à r.l., a new eBay entity located in Luxembourg.

 

This change reflects a change in eBay's VAT structure.

[UK-Fishing-Tackle.co.uk]

Hi Elton

 

Sorry I forgot to ask mum about this - I'll check tomorrow.

 

Meanwhile re-read that email again - it says 'those who have previously reclaimed via HMRC will no longer be able to do so' which I suspect means until the Luxemborg VAT change is implemented then we WERE able to reclaim via the VAT office (certainly looks like it in their email).

 

Ian

[Elton]

More from them:

 

Hello Elton,

 

Thank you for contacting us again. I understand that you have contacted the local Tax Authorities, who informed that they cannot give you a refund.

 

Elton, please understand that when you registered as a seller, you had been asked to provide your VAT registration number, which you did not enter. Hence, you have been charged VAT till date. Please understand that this fee is non refundable, hence, I am sorry to inform you that we will not be able to issue a credit.

 

I realise this may not be the answer you'd hoped for. I sincerely hope your eBay purchases/sales run more smoothly in the future.

 

Kind regards,

 

***********

eBay Customer Support

And my reply:

 

Many thanks for your reply.

 

I did try to register my VAT number with you, on quite a few occasions, and the number was rejected by your system.

 

Again, I have cc'ed your reply to my accountant and H.M. Revenue and Customs, as this is all above my understanding. It was implied to me by H.M. Revenue & Customs that you *should* credit me with the VAT charged, as it shouldn't have been charged and is not yours to keep. You will see that in the quotation from their letter below. If you have charged me VAT, who has that money subsequently been paid to?

 

It may be advisable for you to supply me with a telephone number for them to contact you on, as bouncing emails back and forth could go on forever.

 

Regards,

 

Elton Murphy

 

I'm banging my head against the wall here.