Amazon's UK VAT Establishment Checks Can Pause Your Payouts

In brief: since 1 January 2021, UK law has required Amazon to collect and pay the VAT on sales by sellers established outside the UK — the marketplace facilitator rules. To apply them correctly, Amazon must confirm where each seller is established. In February 2024 Amazon told sellers they might get a request for information to prove their establishment, and that disbursements could be temporarily restricted while the checks were carried out.

How UK VAT establishment affects your account

Seller	Who accounts for UK VAT on Amazon.co.uk sales
Established in the UK	The seller, on their own VAT return
Established outside the UK	Amazon collects and pays it as marketplace facilitator

What Amazon may ask for

Amazon may ask for documents beyond what you've already supplied, as part of its due diligence. It pointed sellers to its UK VAT establishment help page and a dedicated KYC route through Seller Support.

A worked example

A UK-registered company run by a director living abroad receives an establishment request. Until Amazon is satisfied, payouts of, say, £12,000 a fortnight are held. The sales still happened, but the cash sits with Amazon — enough to strain stock purchasing.

What it means for your bookkeeping

• Held payouts aren't lost sales. If disbursements pause, income is still earned; the balance sits with Amazon until released. Your books should show it as money owed to you, not missing revenue.

• Establishment decides VAT. If Amazon decides you're established outside the UK, it treats your UK sales as marketplace facilitator sales, with no UK VAT for you to account for on them. Check that your records match Amazon's view — see Marketplace Facilitator VAT.

• Respond quickly. Delays in answering keep cash tied up.

• Reconcile to the deposit. A paused payout shows up as a settlement without a matching bank line — see why a payout doesn't match Xero.

How TrueBooks helps

TrueBooks detects Marketplace Facilitator VAT orders, posts them to Xero with the right treatment, and matches each settlement to its bank deposit, so a paused payout is easy to spot. See the Amazon Xero integration.