The taxpayer was an Amazon trader based in France who sold products through the Amazon retailer website. The taxpayer was registered for VAT because some stock was stored in a UK warehouse and sold from there. HMRC accepted its application to join the flat rate scheme (FRS) allowing the company to declare output tax according to a fixed percentage of total sales – based on the relevant FRS category of the business – rather than 20%.
During a compliance review HMRC discovered errors made with output tax and issued a best judgment assessment for £7 612 for the periods April 2018 to April 2020. HMRC also used its power ‘to protect the revenue’ by retrospectively cancelling the use of the FRS to the date of registration (VAT Regulations SI 1995/2518 reg 55P). In other words output tax was payable based on 20% of UK sales....
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