Cross-border e-commerce industry crashes! Many sellers’ funds are frozen

Recently, many sellers have discovered that the Amazon stores they opened with British companies, the so-called British local stores, suddenly received reminders from Amazon about withholding payments.

Usually only the VAT of non-local stores will be paid and deducted by Amazon.

Amazon then sent an email to explain to sellers whose funds were withheld and frozen:

Focus:

1. Although a number of stores were established by British companies, they are considered not to be actually operating in the UK, which means they are disguised as non-local stores.

2. Amazon will trace back the VAT owed by non-UK stores since January 1, 2021. Within 14 days of the inspection, the store can operate normally, but the funds will not be available for the time being.

Things have happened one after another recently, from VAT withholding by local companies in the UK to Amazon's new DAC7 reporting regulations, to the French VAT tax agency explosion, each of which is very stressful.

Many sellers think that as long as they register for UK VAT and fill in the Amazon backend, they can continue to sell. This idea is wrong. Amazon's registration and sales records must be reviewed or verified by the tax authorities, and the tax bureau can also directly call the platform data for viewing.

The UK VAT audit is random. If a seller has non-compliant declarations, owes taxes, or has long-term/large tax refunds, then they are very likely to be audited by the UK tax authorities. In addition, sellers with abnormal VAT accounts are more likely to be audited:

The Online Selling Compliance Team of HMRC is responsible for the tax review, and the sender of the tax audit notification is generally [email protected].

Sellers must reply to the tax bureau's notification emails in a timely manner. In order to prevent the accidental deletion of important emails, Xiao K recommends checking the recycle bin regularly. If the email you receive begins with CFSS+7 digits , or CFS reference number, it usually means that you have been audited.

The tax audit process of the UK tax authorities is as follows:

1) Email communication authorization;

2) Payment of taxes payable;

3) Collection of basic materials for audit;

4) Collection of supplementary business-related materials

5) Audit;

6) Approval of audit results (VAT assessment);

7) Confirm taxes;

8) HMRC system entry;

9) Notice of case closing.

Due to differences in communication methods between countries, it is recommended that sellers communicate directly with the tax bureau if they have any questions they do not understand. The disadvantage is that the processing process is very long, and the shortest time to close a case is half a year.

(Bijianchuhai | Kuaxintong Technology focuses on providing one-stop services for cross-border enterprises. Sellers who have the need to pay UK VAT can contact us!)

The tax audit is a routine tax review. Even if you file and pay taxes on time, you may still be audited! When the tax audit is completed, if your taxes are in compliance, the tax bureau will send you an email to tell you that the audit for that period is completed.

However, if it is tax evasion, you have to pay the tax according to the situation. During the normal response period, the store can operate normally. Stores that do not respond may be closed, affecting store operations. Therefore, if you receive a tax inspection email, be sure to reply to the tax bureau as soon as possible!

If unfortunately the UK tax authorities conduct an audit, how should sellers respond?