How to Manage Your Amazon FBA VAT: Your Questions Answered by an Expert Ecommerce Accountant

If Amazon is the "Deemed Supplier," Do My Overseas Clients Still Need a UK VAT Number for FBA?

The UK’s Marketplace Facilitator rules are arguably the biggest source of VAT confusion for international sellers in 2026. Because Amazon acts as the "deemed supplier" and automatically collects and remits VAT on UK consumer sales made by overseas businesses, many sellers incorrectly assume their UK VAT obligations are entirely handled by the platform.

Any specialist ecommerce accountant will warn you that this is a dangerous misconception. While Amazon does collect the output VAT at checkout on most B2C sales, storing physical inventory in a UK FBA warehouse still triggers an immediate legal requirement to register for UK VAT. If your client is a Non-Established Taxable Person (NETP)—meaning they do not have a physical business establishment in the UK—they do not benefit from any VAT registration threshold. The threshold for holding stock in the UK is exactly £0.

Why do they still need the VAT number if Amazon is paying the tax? Primarily for import and supply chain compliance. To get their goods through UK customs and into a British FBA warehouse, they need a UK EORI number linked to a UK VAT number. Furthermore, being VAT-registered allows your client to utilise Postponed VAT Accounting (PVA), which prevents them from having to pay massive, upfront 20% import VAT charges at the border that can cripple their cash flow. Finally, they still must file UK VAT returns to report those "deemed" sales to Amazon as zero-rated transactions, and to account for any B2B sales that Amazon’s facilitator rules do not cover.

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Does the £90,000 UK VAT Threshold Apply to All My Amazon FBA Sales?

When the UK government increased the VAT registration threshold to £90,000 in April 2024, it gave small domestic ecommerce businesses a welcome bit of breathing room. However, navigating the 2026 tax landscape reveals that this threshold is frequently misunderstood, causing sellers to severely misjudge their tax liabilities.

The most critical distinction an ecommerce accountant must make is whether the client is actually established in the UK. The £90,000 threshold applies strictly to businesses legally established within the United Kingdom. As mentioned previously, if your client is an overseas entity (an NETP) using UK FBA, the £90k buffer simply does not exist for them; their registration threshold is zero.

For your UK-based clients, the complexity lies in calculating what actually counts toward that £90,000 rolling 12-month taxable turnover. Sellers frequently forget that zero-rated sales still count toward the taxable turnover threshold.

Additionally, you have to weigh the strategic cost of staying unregistered. Since late 2024, Amazon has applied the standard 20% UK VAT on all its seller fees (including FBA fulfillment and referral fees) for UK sellers. If your client is hovering around £85,000 in sales and deliberately suppressing growth to avoid registration, they are entirely absorbing that 20% VAT hit on their overhead costs because they cannot reclaim it. In many 2026 scenarios, an experienced amazon accountant will advise a client to voluntarily register before hitting the £90k threshold, as it is often the smartest mathematical decision to protect their profit margins.

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How Do We Handle Historical UK VAT Arrears Under HMRC’s Strict Penalty Regime?

Discovering that an FBA client has been unknowingly holding stock in the UK and breaching VAT rules for the past two years is one of the most stressful scenarios a financial professional can face. With HMRC now aggressively leveraging data-sharing agreements directly with Amazon to monitor seller inventory locations, the days of flying under the radar are completely over.

When a client realises they are historically non-compliant, their first instinct is often to quietly register for VAT today and pray HMRC doesn't look at their past Amazon data. As a dedicated amazon accountant, you must stop them from doing this. HMRC’s penalty regime is unforgiving. While the newer points-based system applies to routine late submissions and payments (triggering automatic £200 fines and fixed 2% to 4% payment penalties), the real danger here is the "Failure to Notify" penalty for late registration. If HMRC discovers the historical arrears before you tell them, they view it as a prompted discovery. This allows them to assess the back taxes and apply punitive fines of up to 100% of the total tax owed.

The only professionally sound strategy is to initiate an unprompted Voluntary Disclosure. By coming forward to HMRC first, calculating the exact historical liability using the client's Amazon tax reports, and explaining the oversight, you can drastically reduce the "concealment" penalties—often down to the absolute minimum legal percentage. You will need to help the client file the late registration, submit the formal disclosure, and negotiate a Time to Pay arrangement if the backdated 20% VAT liability is too large for the business to settle in a single sum.

About the Author 

About the Author Sam Hoye is the Co-Founder and Managing Director of Social Commerce Accountants, a specialist UK accounting firm built exclusively for high-growth ecommerce brands, Amazon FBA sellers, and creators. With over 15 years of experience in accounting, ecommerce, and business strategy, Sam is passionate about ditching traditional accounting jargon in favor of straight-talking, no-nonsense financial advice. He and his team help online sellers navigate complex cross-border VAT, seamlessly integrate their financial tech stacks, and uncover their true net profit so they can scale with confidence.

This guide is not financial advice. All content is for educational purposes only. Please consult a qualified accountant or financial advisor to discuss how these strategies apply to your specific business circumstances before making any financial decisions.

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