The rule has two main triggers: goods already located in the UK at the point of sale (typically Amazon FBA stock), and goods sent from overseas in a consignment worth £135 or less. Sales outside these triggers stay with you: B2B sales where the buyer provides a valid UK VAT number, consignments over £135, and some Northern Ireland configurations. You still report the zero-rated deemed supply to Amazon in Box 6 of your UK VAT return.
- Assuming Amazon collects on everything. The deemed supplier rule applies to most overseas-seller B2C sales, but not to consignments over £135 sent from overseas, not to B2B sales where the buyer gives a valid UK VAT number, and not to all Northern Ireland configurations. Each of these scenarios leaves you with VAT to collect.
- Skipping UK VAT registration because Amazon handles the tax. If you hold stock in a UK fulfilment centre and you are not UK-established, you must register for UK VAT from the first £1 of sales, not at the £90,000 threshold. Registration is also necessary if you want to recover import VAT on goods coming into the UK.
- Believing a UK address makes you UK-established. A virtual office, a registered office address with a UK agent, or a forwarding service is not a business establishment for VAT. HMRC and Amazon look for genuine human and technical resources actually operating in the UK. Without that, you are an overseas seller, whatever the paperwork says.
- Mixing up the deemed supply value in Box 6. The zero-rated deemed supply from you to Amazon goes in Box 6 of your VAT return, not Box 1. Reporting these supplies as standard-rated, or omitting them entirely, distorts the return and can trigger an enquiry.
- Treating the Flat Rate Scheme as still useful. Sales where Amazon is the deemed supplier are excluded from the Flat Rate Scheme calculation since 1 January 2021. For most overseas sellers, this leaves the scheme economically pointless and the standard method is usually the better choice.
The deemed supplier rule, in plain terms
Since 1 January 2021, the UK has applied a "deemed supplier" rule to online marketplaces selling goods on behalf of overseas sellers. The mechanism is in section 5A of the VAT Act 1994. Where Amazon facilitates a B2C sale by an overseas seller, the law treats the transaction as two supplies happening simultaneously: a zero-rated deemed supply from you to Amazon, and a standard-rated supply from Amazon to the UK customer. Amazon collects the VAT at checkout and pays it to HMRC. You see the net amount in your disbursement.
The rule has two main triggers. It applies when goods are already located in the UK at the point of sale (typically because you use a UK fulfilment centre like Amazon FBA), and it applies to goods sent from overseas in a consignment worth £135 or less. In both cases Amazon collects, you do not. The £135 figure is the consignment intrinsic value: the sale price excluding transport and insurance unless those are bundled into the headline price.
When Amazon collects, in the typical scenarios
For most overseas sellers running an Amazon UK business, the deemed supplier rule covers a large part of the sales mix. The cleanest cases:
- FBA stock in the UK sold to UK consumers. You ship your goods to a UK Amazon fulfilment centre. Amazon dispatches to consumers across Great Britain. Amazon collects UK VAT at checkout and pays HMRC.
- Direct shipment from overseas, consignment £135 or under, to a UK consumer. Amazon collects UK VAT at the point of sale. No import VAT is charged on the consignment when it enters the UK.
- FBA stock in the UK sold to UK consumers in Northern Ireland. Amazon also collects in this configuration.
What this means in practice is that Amazon takes UK VAT out of the sale price before remitting your disbursement. The deemed supply from you to Amazon is zero-rated, so no UK VAT is due on your side of the transaction. You do not need to issue a VAT invoice to Amazon for these sales.
When you remain responsible for UK VAT
The deemed supplier rule has clear edges. Several scenarios fall outside it, and the responsibility for UK VAT stays with you:
- B2B sales where the buyer provides a valid UK VAT number. If the customer is a UK VAT-registered business and supplies its VRN at checkout, Amazon does not act as deemed supplier. The sale is from you to the business customer, and you must charge VAT (or apply reverse charge where the goods are supplied from overseas).
- Consignments over £135 sent from overseas to UK consumers. These are subject to normal import VAT and customs rules. The customer or their representative pays import VAT at the border, not Amazon. You may need to register for UK VAT if you import the goods yourself or use a customs intermediary acting on your behalf.
- Goods sold to Northern Ireland from the EU, where you are EU-established. The Northern Ireland Protocol (as amended by the Windsor Framework) keeps NI partly in the EU VAT system for goods. EU-established sellers shipping to NI consumers fall under EU distance sales rules, not the UK deemed supplier rule.
- Direct sales outside the Amazon platform. If you sell through your own website (Shopify, your domain), no deemed supplier rule applies. You are responsible for UK VAT in full, and the £90,000 threshold does not protect overseas sellers from registration if goods are located in the UK at the point of sale.
Are you actually overseas? The UK establishment test
The whole framework depends on you being an "overseas seller", which HMRC defines as having no UK business establishment. The definition is stricter than many sellers expect. A UK establishment exists either where:
- The functions of central administration of the business actually take place in the UK (the head office reality, not the registered office), or
- The business has a fixed establishment in the UK: a permanent physical presence with the human and technical resources to make or receive taxable sales.
HMRC's published guidance is explicit about what is not sufficient: a UK address used only for correspondence, a virtual office, a registered office maintained by an accountant or formation agent, a forwarding service, or simply incorporating a UK company while operating it from abroad. Amazon applies the same test through its own seller verification process and has been increasingly aggressive in challenging claims of UK establishment. We see Amazon withhold disbursements while it verifies establishment status, and HMRC can require back-payments where Amazon has incorrectly treated a seller as UK-established.
The practical consequence: if you operate from outside the UK and Amazon (or HMRC) determines you are not UK-established, the deemed supplier rule applies to your sales, and you may also need to register for UK VAT in your own name to handle the situations the rule does not cover.
Amazon is questioning your UK establishment status or HMRC has raised an assessment on past sales? Our HMRC Response Support frames the reply.
How to report Amazon-collected VAT on your UK VAT return
If you are UK VAT-registered (which most overseas Amazon sellers need to be, to recover import VAT or to handle B2B and over-£135 sales), Amazon-facilitated sales still go on your return, just in a specific way:
- Box 1 (VAT due on sales): zero, for deemed sales to Amazon. You did not collect the VAT; Amazon did.
- Box 6 (value of sales): include the net value of the deemed supply to Amazon. This represents your total turnover, even though the VAT was collected by the marketplace.
- Sales outside the rule (B2B with UK VRN, over-£135 direct shipments, your own website) follow normal VAT treatment: Box 1 for the VAT charged, Box 6 for the net.
- Input VAT on UK costs (import VAT, professional fees, fulfilment fees from Amazon) goes in Box 4 under the normal recovery rules, even where most output VAT is being collected by Amazon. This is often the main reason overseas sellers register voluntarily.
Records of Amazon-collected sales need to be kept for six years. Amazon's seller reports (the VAT Transactions Report in particular) are the authoritative source for the figures and break down which transactions were collected by Amazon and which were not.
When you might need expert VAT advisory
The deemed supplier rule sounds simple in headline terms but produces real complexity once a seller's business mix spans multiple configurations. In practice, the situations below are where a senior specialist's read makes a real difference:
- You're not sure whether you qualify as UK-established, and Amazon or HMRC has started asking questions about your setup
- You sell a mix of B2C and B2B, or a mix of UK-stored and overseas-shipped inventory, and the VAT treatment varies sale-by-sale in ways that are hard to track
- You've received a back-payment demand from HMRC covering historic sales where the deemed supplier rule should arguably have applied (or shouldn't have)
- You sell to Northern Ireland consumers from the EU or GB and need to map the Windsor Framework rules onto your actual fulfilment routes
- You're considering switching from Amazon FBA to your own website or to a different marketplace, and the VAT consequences of that change need to be modelled before you commit
- Your Amazon disbursements have been suspended pending establishment verification, and you need a senior specialist to help unblock the position
Whether you're a business owner navigating this yourself or an accountant working on a cross-border client case, we focus on the VAT questions where extra expertise pays off, and we work in plain English.