If you sold on Amazon UK before 1 August 2024, there's a good chance some VAT is sitting there waiting to be claimed back. The question is who owes it to you: HMRC or Amazon. The answer depends on one thing, and a lot of sellers get it wrong.
Here's the short version. Before 1 August 2024, Amazon billed your seller and FBA fees from Luxembourg through a company with no UK base. That changed the VAT mechanics completely. Some sellers were charged 20% VAT they should never have paid, and others self-accounted for it and can recover it through their VAT return.
This guide walks through both routes, shows you which one applies to you, and gives a worked example with the actual VAT-return boxes. It's written for UK-established Amazon sellers, whether you're running an FBA business or selling as a merchant fulfiller.
We'll keep the figures dated and cited. Where we show numbers, they're illustrative, and the tax rules are linked straight to HMRC.
Why did the VAT treatment of Amazon fees change in August 2024?
In a sentence: before 1 August 2024 your fees were billed from Luxembourg and fell under the reverse charge, but from that date Amazon began billing through a UK branch and charges 20% UK VAT directly.
Up to 31 July 2024, the entity invoicing UK sellers for referral fees, FBA fees and subscriptions was Amazon Services Europe S.a.r.l, based in Luxembourg with no UK establishment.
Under the place-of-supply rules, a business-to-business service is supplied where the customer belongs. So a service supplied to a UK business customer is treated as supplied in the UK, and because the supplier was overseas, the reverse charge applied. HMRC sets this out in VAT Notice 741A.
That meant Amazon did not add UK VAT to the fees, provided you had given them a valid VAT number and were treated as a business. You accounted for the VAT yourself.
From 1 August 2024, the invoicing entity changed to one with a UK branch, so Amazon now charges 20% UK VAT on the face of the invoice. That's a different mechanic entirely, and we cover it lower down.
Who can reclaim VAT on Amazon fees from before August 2024?
There are two groups, and which one you're in decides whether you go to HMRC or to Amazon.
Group 1: you were VAT-registered and gave Amazon your VAT number. Amazon did not charge you UK VAT. Instead you should have self-accounted under the reverse charge. If you did that correctly, there's nothing extra to claim, the VAT was already neutral on your return. If you forgot to apply the reverse charge at all, that's an error to correct, not a windfall.
Group 2: you did not give Amazon a VAT number, or Amazon treated you as a consumer. Here Amazon added 20% VAT to your fees. If you were genuinely running a business, that VAT should not have been charged. You reclaim it from Amazon, not HMRC, by proving your business status.
A quick way to tell which group you're in: pull up an Amazon fee invoice dated before 1 August 2024. If it shows a separate 20% VAT line that you actually paid, you're likely in Group 2. If it shows the fee with no UK VAT added and a reverse-charge note, you're in Group 1.
How does the reverse charge work on pre-August 2024 Amazon fees?
If you're VAT-registered (Group 1), the reverse charge means you act as both the supplier and the customer for that fee. You declare the VAT and reclaim it on the same return, so the net cash effect is usually nil.
Per VAT Notice 741A, for a fee that falls under the reverse charge you:
- Put the VAT due (20% of the fee) in box 1 as output tax.
- Reclaim the same amount in box 4 as input tax, subject to the normal input-tax rules.
- Include the net value of the fee in both box 6 and box 7.
Because box 1 and box 4 cancel out, a fully taxable business pays no net VAT on the fee. You're not getting a refund here, you're recording the transaction correctly.
The one scenario where this is not neutral is if your business makes exempt supplies and is partly exempt, in which case you may not recover all the box 4 input tax. Most product sellers are fully taxable, so this rarely bites, but it's worth a check.
If you never applied the reverse charge on those fees, you have an error on past returns. You don't simply claim a refund. You correct it under the HMRC error-correction rules, which we cover in the deadline section below.
How do you reclaim VAT Amazon charged you directly?
If you're in Group 2 and Amazon added 20% VAT because they treated you as a private consumer, the money is recovered from Amazon, not through your VAT return.
You reclaim it by proving to Amazon that you were operating as a business during the period the VAT was charged. In practice that means contacting Seller Support and supplying evidence of your business status.
Useful evidence includes:
- Your VAT registration certificate, if you have one.
- A copy of a corporate tax return or Self Assessment showing the trade.
- Your certificate of incorporation, if you trade through a limited company.
- A document showing your Unique Taxpayer Reference (UTR).
You do not have to be VAT-registered to recover this. A sole trader who can show they were genuinely in business can qualify. Once you submit a case, Amazon may ask for more proof, and a refund typically takes some weeks to process.
The key distinction: this VAT never belonged on the invoice, so it isn't input tax you claim from HMRC. It's an overcharge you recover from the supplier. Putting it on your VAT return as input tax would be wrong and could create an error to unwind later.
Worked example: the two routes side by side
Illustrative example. Priya runs an Amazon FBA business selling homeware. Over the 12 months to 31 July 2024 she paid £6,000 in net Amazon seller and FBA fees. We'll look at both versions of her situation using the standard VAT rate of 20% (gov.uk VAT rates).
| Item | Group 1: VAT-registered, reverse charge | Group 2: charged 20% VAT directly |
|---|---|---|
| Net fees paid to Amazon | £6,000 | £6,000 |
| VAT shown/charged on invoices | £0 (reverse charge) | £1,200 |
| VAT self-declared (box 1) | £1,200 | n/a |
| VAT reclaimed (box 4) | £1,200 | n/a |
| Net VAT cost on the return | £0 | n/a |
| Amount recoverable from Amazon | £0 | £1,200 |
In Group 1, Priya's £1,200 in box 1 and box 4 net to zero. She's not owed a refund, she just needs the entries to be correct. Box 6 and box 7 each carry the £6,000.
In Group 2, Amazon wrongly added £1,200 of VAT (£6,000 at 20%). Priya recovers that £1,200 from Amazon by proving she was in business. It does not go on her VAT return.
The arithmetic to confirm: £6,000 multiplied by 20% equals £1,200, and £6,000 plus £1,200 would have been her gross outlay if the VAT stood.
What's the deadline to reclaim?
For the HMRC route, input tax must generally be claimed within 4 years. HMRC's VAT guide (Notice 700) sets the four-year cap on recovering input tax, running from the due date of the return on which you were first entitled to claim.
If you under-declared or missed the reverse charge on past returns, you correct it rather than just claiming late. Under VAT Notice 700/45:
- If the net error is £10,000 or less, or up to £50,000 and less than 1% of your box 6 figure, you can adjust it on your next VAT return (Method 1).
- If it's larger than that, or deliberate, you must notify HMRC separately (Method 2).
The same four-year window broadly frames the error-correction time limit too.
For the Amazon route, this is Amazon's own refund process rather than an HMRC claim, but the practical takeaway is the same: don't sit on it. The further back the fees go, the harder the evidence is to assemble, so it's worth raising a case promptly.
What changed for fees from 1 August 2024 onwards?
From 1 August 2024, Amazon's UK seller fees are billed by an entity with a UK branch, so 20% UK VAT is now charged directly on the invoice (gov.uk VAT rates).
For VAT-registered sellers, that's manageable: you reclaim the VAT as input tax in box 4 on your VAT return, just like any other UK supplier's VAT. There's a cash-flow wrinkle, because you pay the VAT now and recover it on the next return, but you're not out of pocket overall.
For sellers who are not VAT-registered, the change is a real cost. You can't reclaim the 20%, so your fees effectively rose. If your VAT taxable turnover is climbing toward the £90,000 registration threshold (the figure in force from 1 April 2024), it's worth modelling whether voluntary registration makes sense, since it would let you recover that fee VAT.
Separately, bear in mind that platforms like Amazon now report seller data to HMRC under the reporting rules for digital platforms, with the first reports covering 2024. That's not about fee VAT, but it's a good reason to make sure your VAT position is tidy.
If you'd like a second pair of eyes on which group you're in and how far back you can go, our team works with FBA and marketplace sellers every week. Get in touch about accounting and VAT support for Amazon sellers and we'll check your fee invoices and returns for you.
FAQs
Can I reclaim VAT on Amazon fees if I'm not VAT-registered?
Yes, but only where Amazon actually charged you 20% VAT directly before August 2024 by treating you as a consumer. You recover that from Amazon by proving you were in business, not through a VAT return. You cannot reclaim reverse-charge VAT, because that route only exists for VAT-registered businesses.
Do I claim the VAT back from HMRC or from Amazon?
It depends. If you were VAT-registered and Amazon applied the reverse charge, the VAT was handled on your own VAT return and nets to nil, so there's nothing to refund. If Amazon wrongly charged you 20% VAT, you recover that from Amazon, not HMRC.
How far back can I reclaim VAT on Amazon fees?
For input tax claimed through your VAT return, HMRC applies a four-year limit from the due date of the return on which you first could have claimed. Amazon's own refund process for wrongly charged VAT is separate, so raise it promptly while you can still evidence your business status.
What is the reverse charge on Amazon fees?
Before 1 August 2024, Amazon billed UK sellers from Luxembourg, so under the place-of-supply rules the UK customer accounted for the VAT. You declared 20% VAT in box 1 and reclaimed the same amount in box 4, leaving no net VAT to pay if you were fully taxable.
Does this still matter now that Amazon charges VAT directly?
The pre-August 2024 position still matters if you have not yet reclaimed VAT Amazon wrongly charged you, or not corrected a missed reverse charge, within the time limits. For fees from 1 August 2024, Amazon charges 20% UK VAT that VAT-registered sellers reclaim as normal input tax.
