Updated Country Groups Tax Wizard
Following Brexit completing on 31/12/2020 we have made some updates to the country grouping wizard
The team at Link My Books are happy to provide users with technical assistance in applying tax rules to their Link My Books setup. We are not Tax Advisors and so our advice and suggestions on the application of tax rules cannot be construed as tax advice. We highly recommend that users seek advice from qualified accountants for their tax compliance.
Who is this article for?
This article is for users with Amazon Europe accounts on our Country Groups method only. Please check your Settlement Settings page inside Link My Books to ensure you are on this method before reading this article.
If you are using "Tax Jurisdictions" please see this article.
If you are looking for the eBay guidance please see this article.
Why is the wizard changing?
On 31/12/2020 the UK left the EU and with this two new rules for UK VAT were brought in.
Firstly, Sales delivered to EU customers, from Great Britain, should now be Zero Rated for UK VAT.
These sales are now exports and treated the same as sales going outside the EU prior to Brexit in terms of UK VAT.
Sources: HMRC Guidance
Secondly, Amazon (and other Online Marketplaces like eBay) will start collecting and remitting UK VAT on sales which are:
a) delivered to UK customers from outside the UK with a value of up to £135 or;
b) delivered to UK customers from the UK, where the seller is not a UK business.
How does this affect me?
Any sales to EU customers that are dispatched from GB will need to be Zero Rated for UK VAT.
Also, Amazon and eBay will now be reporting sales as either the seller being responsible for calculating and filing UK VAT or themselves (the online marketplace) being responsible.
As such, you will need to only calculate and file UK VAT on sales where you the seller are responsible for doing so.
Any sales where the online marketplace is responsible for the VAT should be classed as Zero Rated supplies for UK VAT purposes.
What do I need to do?
Since 1st January 2021 we have been working hard to update our internal systems and make it as simple as possible for you to ensure you are following these new rules for UK VAT and to ensure that you do not overpay it unnecessarily.
As such we have updated our Tax Wizards.
All you need to do is re-do the tax wizard for your European Amazon accounts and UK eBay accounts connected to Link My Books.
From the Accounts & Taxes menu in Link My Books, navigate to the Accounts & Taxes Wizard as shown below 👇
Confirm your accounts selection and click next 👇
Select all the countries you hold VAT registrations in the EU, or select "None of the above" if you are only VAT registered in the UK👇
The final step of the wizard is where we have made some changes. You will now be prompted to confirm your tax rates for 2 Pre-Brexit groups and 3 Post-Brexit groups, shown below 👇
👉 We recommend that you check what tax rates apply to your business with your accountant before completing the wizard.
Once you have completed the wizard we will re-process any un-sent settlements applying the new settings.
What if I have already sent some 2021 data to Xero or QuickBooks?
Not to worry, simply void the invoices/journals in Xero/QBO, then click the refresh icon on them in Link My Books and then re-send them.
What if I have a settlement that spans between December 2020 and January 2021?
We deal with this automatically, so any transactions dated before 1st January 2020 will fall into the old country groups and any after that will fall into the new groups.
What if I sell a mixture of Standard Rated, Zero Rated and Reduced Rated Goods?
Once you have completed the tax wizard your product group tax rates will be overwritten and will need to be set up again. Please complete the tax wizard first then use the Product Groups guidance to re-apply your product group tax rates again.