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British Amazon sellers despair after payment freeze

Many British Amazon merchants are at a loss after the platform froze payments, leading to numerous questions and complaints from traders. Some of them claim to be in financial straits due to the situation.

In many cases, sellers are unsure about the exact reasons behind the blockade and are clueless about how to lift it. A common complaint is that Amazon continues to ask them for information, even when they have already provided it. Meanwhile, there seems to be minimal seller support available.

Tax obligations

In January, Amazon sent emails to hundreds, if not thousands, of sellers, warning them that their disbursements could be deactivated due to indicators of unmet United Kingdom business establishment requirements. Amazon demands evidence that sellers are based in the United Kingdom to fulfill tax (VAT) obligations, ensuring a fair marketplace without tax evaders on its platform, a leader in ecommerce in the United Kingdom.

Amazon requires proof that sellers are UK based.

This has resulted in ongoing administrative hassle, with British traders uncertain about why their legitimacy is being questioned. Some sellers are also required to pay VAT for historical B2C sales dating back to 2021 if they fail to prove their UK business status.

Angry and concerned sellers

Amazon confirmed the authenticity of its information requests on its UK Seller Central forum. A post by an Amazon seller about disbursements has garnered over thirteen hundred responses (and counting) from angry and concerned sellers.

The UK’s Small Business Commissioner is probing the matter.

This week, Liz Barclay, the UK’s Small Business Commissioner, stated that she is investigating why Amazon suddenly requires additional documentation. Barclay also mentioned that she is trying to alleviate the impact of disbursement holds on Amazon with the United Kingdom tax authority HMRC.

Funds wrongly frozen

The issue in the United Kingdom is not an isolated one. Previously, numerous European Amazon traders had their funds wrongly frozen, as reported by German media in November. Without admitting fault, Amazon eventually decided to lift the disbursement hold on the sellers’ funds. It was said to be the first time Amazon had lifted such a blockade on its own, and British sellers hope it will not be the last.

Update February 2nd: Amazon has reached out to us with a statement. “Under UK tax legislation, online stores are required to collect and remit VAT on transactions involving overseas sellers. We therefore require verification of all sellers, which may include additional requests for information about where they are based. We aim to minimize any inconvenience this may cause sellers and they can contact our support teams for further advice”, said a spokesperson.
However, UK sellers understand the fact that collecting these documents is legally required, but they still encounter issues with their disbursement after already having sent the documents.