A Buckinghamshire resident whose sole source of income came from selling on Amazon said they and ‘hundreds’ of others were ‘cut off from all income’ last week, resulting in 'harmful' financial and mental strain. 

A Milton Keynes resident who wanted to remain anonymous claimed they and "hundreds" of others received a notification from Amazon, the platform providing their sole family income, last week stating that their disbursement payments were at risk of being deactivated due to unmet UK business requirements.

The notification, requiring recipients to provide in some cases multiple forms of proof that they are based in the UK for tax purposes, told some sellers that they would need to pay Value Added Tax (VAT) for historical sales dating back to 2021 should they not provide sufficient proof of being based in the UK within a specified period, with one person told their bill would be in the realm of £100,000.

The new verification for UK-based sellers is based on legislation introduced by the government in 2021, requiring Amazon to collect VAT on transactions by overseas sellers, but the resident in question said they believed an “algorithm error” had been behind the “huge cohort of UK sellers” suddenly affronted by the notification.

They added that their disbursements had now resumed but were aware of many others – especially smaller-scale sellers who make under £85k a year and are thus exempt from VAT – still living in a state of “constant stress” as a result of the change.

“They are essentially punishing the smaller sellers and it’s been hard to get through to anyone at Amazon to talk about it. I’ve found it incredibly difficult to find any human empathy or compassion about this from the company.

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“We were instantly cut off from all income without any idea of when the cashflow would be restored – I'm worried someone could come to harm under that strain. It’s got a horrible feeling about it.”

Sellers on an Amazon forum thread discussing their experiences of the withheld disbursements said they had provided multiple forms of identification via email to the company but still had yet to see their funds released.

One person wrote: “We’re fully verified on Amazon already. It’s so frustrating that payments can just be frozen like this for small businesses.” Another added: “I’m still waiting on my reply from Amazon. I felt sick last night and woke up with a headache. Not getting paid means I’ll be behind on my credit payments like many others. What’ll happen after 30 days if Amazon keeps asking for the same thing? They’ll force us to pay VAT for four years of transactions when some of us are not even VAT registered?”

A spokesperson for Amazon said: “Our selling partners are incredibly important to Amazon and our customers. 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 minimise any inconvenience this may cause sellers and they can contact our support teams for further advice.”