by Eunice | Dec 31, 2022 | Business
Had your Amazon seller account suspended? Don’t panic—you can still have it reinstated when done right. Get back on track by learning how to handle an Amazon suspension appeal.
A Guide on Managing an Amazon Suspension Appeal
When you’re a seller on the largest online marketplace, getting your account suspended is a nightmare. It translates to lost revenues, with these losses increasing further the longer your account is inactive. Fortunately, you can make a strong case for reversing your suspension with Amazon. Here’s how you should do it.
What an Account Suspension Means
When Amazon suspends your seller’s account, you won’t have selling privileges. During this time, your product listings will not be visible on the platform. It translates to a significant loss in revenues and reputation, especially if you’ve been frequently among the top results.
Depending on the type of account suspension, you can request your status to be reversed and your selling privileges reinstated through an Amazon suspension appeal.
Why Amazon Suspends an Account
The main reason Amazon revokes the privileges of more than a thousand sellers is the latter’s violation of the platform’s guidelines, terms, and conditions. Because of the e-commerce giant’s many complicated policies, some sellers have inadvertently overstepped some of these strict regulations, resulting in their suspension.
Although Amazon doesn’t publicly disclose why they suspend accounts to protect their process, some sellers have figured out a few of the most common reasons for revoked privileges. Some of these include:
- Poor product quality
- Counterfeit or inauthentic items
- Sale of restricted or prohibited products
- Goods are not as advertised
- Intellectual property violations
- Delays in fulfilling orders
- No shipment tracking provided
- Multiple negative customer experiences
- Manipulating reviews or feedback
- Running multiple seller accounts
Amazon’s main priority is its customers, not the sellers. No matter how big a brand or store is, the e-commerce giant will suspend it if it finds reasonable grounds to do so, especially if the complaints come from the buyers.
Despite being strict, the platform allows sellers to request a reversal. They can file an appeal, but it doesn’t always guarantee promising results, especially if done incorrectly.
How to Handle an Account Suspension Appeal
The suspension of your Amazon seller’s account can be catastrophic to your business and finances. Besides lost revenues, you continue incurring operational expenses, such as employee wages, warehousing fees, and other costs, impacting your earnings.
It’s crucial to end the unfavourable status as soon as possible, so below are five tips on efficiently dealing with an Amazon suspension appeal.
1. Never Rush Your Appeal
When Amazon sends a notification regarding account suspension, it only includes a simple explanation for its action. If it’s your first time receiving one, do not panic. Avoid sending out multiple emails asking the online marketplace to reconsider their decision—this hurts your chances of a reversal even more.
Fortunately, Amazon gives suspended accounts a 17-day window to file an appeal for reinstatement through seller central. Take this time to examine your operations and identify possible reasons your selling privileges have been removed.
Also, refrain from asking for more details from Amazon—every communication sent counts as an appeal on their end, further hurting your chances of reinstatement.
2. Be Professional
Another common mistake made by many online sellers on their Amazon suspension appeal is responding with high emotions. It’s only expected that you’d be angry over the sudden deactivation, especially if you’ve been faithfully abiding by the rules.
Never use foul language, threats, and emotional appeal in your response. Avoid criticising the e-commerce giant’s policies and processes—your opinion is unwarranted and unprofessional. Plus, it puts you in a less favourable position in their eyes.
Instead, be concise with your communication and remain professional in every interaction. Amazon will likely be more considerate of your situation.
3. Perform a Comprehensive Assessment
Use the 17-day period to conduct an internal assessment of your operations and performance. Begin your investigation based on Amazon’s disclosed justification in its suspension notice.
For example, if Amazon suspended your account for sub-par performance, check the metrics in your seller central dashboard. Below are acceptable performance ratios:
- Order defect rate <1.0%
- Pre-fulfilment cancellation rate <2.5%
- Late shipment rate <4.0%
Order defect rate: The ratio of orders with negative feedback, chargebacks, or A-Z guarantee claims to total completed orders.
Pre-fulfilment cancellation rate: The ratio of orders you’ve cancelled prior to shipping out vis-à-vis total orders received.
Late shipment rate: The percentage of items dispatched past the estimated shipping date.
Since Amazon doesn’t go into specifics regarding your suspension, the problem may have also stemmed from violating one of the online marketplace’s many rules. It can range from selling counterfeit goods and unauthorised product distribution to offering discounts in exchange for positive reviews and copyright infringement.
4. Create a Solid Plan of Action
Suspensions vary in severity—the more serious it is, the longer the reinstatement may take or the less likely the appeal will be successful. But don’t despair—a well-constructed Amazon suspension appeal can overturn a punishment.
When the e-commerce giant requests a Plan of Action, refrain from submitting a generic plan. Amazon will usually detail what should be included, such as supporting documents like invoices and product safety information. Furnish them to strengthen your case.
Your Plan of Action should cover the following:
- Root cause analysis: Identifies the reason for suspension or offence based on your internal examination
- Remediation: Discusses actionable steps to rectify or address the problem
- Preventative section: Outlines clear corrective measures to prevent future violations, reiterating your intention to continue providing top-notch customer service
Remember to keep your Plan of Action brief but comprehensive. While Amazon prefers data-driven, fact-based appeals, it’s also essential to admit fault and acknowledge the harm done to your buyers.
If you’d rather not take chances with your Amazon suspension appeal, consult an expert from Sterlinx Global.
5. Avoid Asking for Specific Reasons
When you receive your suspension notice, Amazon provides a general reason for the deactivation. Refrain from sending multiple emails asking for specifics—every message is treated as an appeal submission, which can negatively impact your case. Instead, use the information provided to conduct your internal investigation and address the issue comprehensively in your Plan of Action.
by Eunice | Dec 28, 2022 | European VAT
A Guide on German VAT for E-Commerce Businesses
The best way to grow your business as an online seller is to expand your reach beyond your current customer base. Germany, like other European Union (EU) member states, is an excellent place to begin your strategy. Start on the right foot with crucial information about German VAT and its compliance.
1. All Imported Goods Are Subject to VAT
When you’re based outside the EU, any goods you sell are considered an import. And if your buyer lives in Germany, they must pay VAT on products purchased from your store, which you will remit to the government.
Prior to 1 July 2021, imported goods with less than €22 value were exempt from German VAT. However, the EU abolished the exemption in the revised VAT rules for cross-border e-commerce activities.
Some non-EU sellers mislabel and undervalue the consigned goods to avoid charging VAT. This loophole allows them to lower prices than their EU competitors and circumvent paying taxes, costing the government millions in uncollected revenue.
2. There Is a Minimum Threshold
Before the revised VAT rules were issued in 2021, EU countries had different turnover threshold requirements for VAT registration. In Germany, distance sellers only needed to register if their annual sales revenue exceeds €100,000. But now, that has been replaced with a lower limit.
The new EU-wide threshold to register for VAT is €10,000. If you intend to carry out transactions subject to German VAT, i.e., sell goods online, it’s better to arrange registration even if you anticipate gross sales to be below the set threshold.
3. You Must Be Registered for VAT
Remember to apply for German VAT registration before commencing your business activities. Otherwise, you may face penalties for submitting your registration late or while already doing business involving taxable goods in the country. German tax authorities can be severe in penalising violations.
Like in other EU states, Germany doesn’t require non-resident e-commerce sellers to establish a local presence to trade. It does, however, mandate VAT registration on activities like importation and distance selling.
To register correctly, contact the jurisdictional tax office in the relevant German state. Submit the registration form completed in German along with the following documents:
- A copy of the Articles of Association
- An excerpt from the business’s trade register
- Certificate of VAT liability if registered in other EU member states
- Proof of economic activity in the country
- Power of attorney, if using a fiscal representative or agent
The local tax authorities may require some documents to be translated into German. Moreover, they are quite critical of foreign companies’ VAT registration because of substantial lost government revenues and the potential for carousel fraud.
4. Fiscal Representation Is Optional
When registering for German VAT, non-EU businesses don’t need to appoint a fiscal representative. Foreign companies can apply themselves if they know the language and are familiar with the process.
However, working with a fiscal representative or a tax advisor is still highly recommended. Their primary responsibility is fulfilling tax obligations, such as submitting and filing VAT returns, on behalf of their clients.
5. VAT Registration Can Be with One EU State Only
To improve VAT collection in the EU, one of the new rules for cross-border e-commerce activities includes the introduction of the Import One Stop Shop (IOSS). This online platform for non-EU sellers allows them to register for VAT in only one EU member state.
Once online sellers obtain their IOSS number, there’s no need to register for VAT in all the EU countries they will sell in. They can declare and pay the VAT of goods imported from non-EU territories.
The streamlined system ensures that the correct tax amount goes to the right EU member state. That’s because keeping track of the applicable VAT rate can be confusing, even to seasoned e-commerce businesses, because of the different tax legislations in each EU country.
6. Standard VAT Rate Is Above 15%
As a member of the EU, Germany based its VAT legislation on EU directives. Although the country can set its standard rate, it should be higher than 15%. The German VAT rate is currently 19%.
At the height of the COVID pandemic crisis, Germany temporarily cut its standard rate to 16% to support the economy. Except for hospitality businesses, the VAT rate has now reverted to its pre-pandemic level.
Like other EU member states, the country’s VAT system is tiered. Apart from the standard 19% rate applicable to most goods and services, the country applies the reduced rate of 7% to certain items like food, books, newspapers, other periodicals, timber, and some agricultural inputs, to name a few.
7. Know Your VAT Obligations
Being registered for German VAT as an e-commerce seller means you have certain responsibilities to fulfil. Two important obligations are to settle your tax liability with the proper authorities and file the corresponding returns.
Filing Frequency
For newly registered businesses, they must submit VAT returns monthly for the first two years. After the prescribed period, the frequency varies according to net VAT due in the prior year:
- Above €7,500: File every month
- Below €7,500: File every quarter
- Less than or equal to €1,000: File every year; no preliminary VAT returns required
In addition to monthly or quarterly filings, all companies that are VAT-registered must file an annual return for each calendar year, regardless of revenue.
VAT returns are due by the 10th of the month following the covered period. Moreover, the annual VAT return should be submitted by the end of May of the next calendar year. But if it falls on a weekend or national holiday, it is extended to the next working day.
VAT returns submissions are done electronically through the ELSTER systems of the relevant German tax office, which depends on your country of residency.
Late Penalties
The charges for failing to comply with the deadlines are as follows:
- Late filing: 10% of the VAT due but no more than €25,000 per return
- Late payment: 1% of the VAT due per month of delay
Avoid paying hefty fines for non-compliance with the assistance of a tax agent or fiscal representative.
by Eunice | Dec 20, 2022 | Business
1. The Ideal Structure Differs for Every Business
Not all businesses in the construction industry are the same—some focus on building, while others specialise in plumbing, electrical works, and roofing, among others. Remember that your particular circumstances dictate how you should structure your business.
For instance, if you have big projects, it may be better to set up your business as a limited company instead of a sole trader or partnership. Talk to a team of accountants for construction to know what suits your needs best.
2. Estimate Projects Correctly
The first step in managing finances is to grasp project costing. Regardless of your usual contract size, you must have a solid understanding of how much you should quote a job.
Learn to break down a project’s materials, labour, and other overhead costs. Be detailed in doing this so you can arrive at an accurate break-even figure. Before sending out a quote, don’t forget to have allowances for any unforeseen expenses from delays and oversights.
3. Project Management Is Crucial
Experienced contractors and subcontractors will tell you that construction works rarely go according to plan. Despite extensive preparations, jobs sometimes require recalibration or revision as they progress, negatively impacting costs and profits.
Control costs by staying on top of ongoing projects with detailed timelines and budget schedules. It’s best to anticipate or address any deviations and delays early on to prevent them from snowballing.
4. Keep an Eye on Your Margins
Revenues shouldn’t be your only measure of success—simply because you have more work doesn’t mean you’re earning well.
Accountants for construction will tell you that gross profit and margins are a better gauge of financial performance. These figures show how much you’ve earned on a contract, given the costs incurred for rendering the service.
For example, a £400 project requires £300 in labour and materials, resulting in a £100 profit and gross profit margin (GPM) of 25% (£100 / £400). If that’s an acceptable rate, aim to maintain it for every job and monitor it regularly throughout a project’s lifecycle.
5. Avoid the Cash Flow Pitfall
In the construction business, tracking the movement of your funds can be complicated. There’s often a disparity between billing and recognising revenue.
For instance, with progress billing, you only get paid for the percentage of work completed. Even with cash expected to come in, you may still have insufficient funds to purchase materials.
Balancing your business’s cash flow is necessary to ensure you’re not cash-strapped at any point in your operations. Rein in your receivables by regularly invoicing your clients—for those that cannot pay on time, stop work to prevent money from being tied up further in the project.
Asking for a down payment is common, especially when the work requires costly materials.
6. There Are 4 Construction Accounting Methods
To address challenges in accounting, construction businesses often use more than one accounting method for every project. As a contractor, you must understand the key differences between each.
The cash basis method recognises revenue upon cash collection and expenses with money spent. On the other hand, the accrual method records revenue when earned and expenses when they occur, without considering when money changes hands.
Besides cash and accrual basis, there are two more methods: percentage-of-completion (PCM) and completed-contract (CCM). With PCM, revenue and expenses are apportioned based on the project’s progress. CCM only recognises a project’s financial activity upon its completion.
Each accounting method will impact revenues, expenses, and tax due. Most companies use a combination of two or all four. Talk to a construction accountant to know which fits your business, as it can be a complex topic.
7. Compliance Is Tricky
Legislative accounting requirements in the UK are constantly changing, and keeping up with changes is something you may have overlooked because of your workload. However, that’s often not a reasonable excuse to waive charges.
Many accountants for construction will tell you that estimating your obligations to the HMRC is confusing. And mistakes on VAT, corporation tax, and CIS can be expensive.
8. Beware of the CIS Trap
Under the Construction Industry Scheme (CIS), contractors must withhold a certain percentage of payments to their subcontractors and remit these to HMRC. These deductions are considered advance payments towards a subcontractor’s taxes and National Insurance contributions.
The deduction rate is 20%, but it increases to 30% if a subcontractor is unregistered for CIS. If you’re a contractor, consider registering as a subcontractor in case you take on a project as one. The CIS registration process depends on your business structure.
Since additional CIS measures are put in place or revised occasionally, calculating the deductions and filing returns with the HMRC can be complicated. Let an accountant handle it to avoid the pitfalls.
9. Know the VAT Reverse Charge
In addition to CIS, those in construction have to deal with the VAT domestic reverse charge.
The scheme, an extension of CIS, was introduced to change the handling of VAT for certain construction industry services and building materials. It applies to transactions between VAT-registered contractors and subcontractors.
Instead of subcontractors accounting for VAT in their invoices, the contractors will settle the VAT directly to HMRC. This change was made to minimise fraud as VAT-registered construction businesses charged for VAT but never remitted the amount.
10. It’s Better to Work with a Professional
The nature of businesses in the construction industry creates complex accounting and tax management issues.
Different contract terms, project-based revenues and costing, and varying project timelines make it difficult for contractors to keep up with accounting.
by Eunice | Dec 18, 2022 | E-Commerce
5 Essential Financial Tips That Can Help You in Selling Products in the EU
Knowing how to sell products in the EU is a big help if you are a business owner. VAT is not applied at the border on goods traded with the EU. Whether the recipient of the product is registered for VAT in the country of arrival has a significant impact on how VAT is subtracted from these inputs.
Consignments in Northern Ireland and EU member states that are part of the same legal entity (often referred to as own shipments) are considered inventory for this purpose.
Gas and electricity, as well as heating and cooling, are subject to specific regulations. If you want to start up your business or sell your goods and services in the EU, you need to attain a handsome knowledge of their rule and regulations for selling goods.
How to Sell Products in the EU: EU products rules and regulations
There may be minor alterations, but the fundamental guidelines remain the same. You should get in touch with the appropriate VAT authorities if you want to look into the situation in Northern Ireland or another EU nation.
If you have to sell a different product, make sure that those products do not harm any individual or the risk related to the items that organisations supply is typically disclosed to the consumers.
For VAT reasons, the supplier sends the items to the client for depreciation by the customer. This supply should be seen as a justification for the transaction.
This indicates that the product is delivered by the supplier in the nation of origin. In contrast, the consumer purchases the goods in the destination country to avoid paying VAT.
Returned goods
Without triggering a purchase of own goods by the supplier under the 12-month rule or the relevant events rule, the call-off stock may be returned to the state of origin by the provider.
It depends on various factors like:
- The product is returned to the country of origin by or under the supplier’s control within 12 months of arrival in the land of the destination
- Update the call list accordingly
- There is no need to return the product to the supplier as the product may have been sold to another party in the country of origin.
Goods sent on sale or approval or returned or similar terms
These are products that will not be delivered until customer approval is obtained. Adoption happens when a customer describes his plans to keep the product.
Until then, customers have an unparalleled right to return products at any time unless an agreed deadline automatically accompanies an approved product.
- If you are sending anything, you are buying it in the EU nation it is going to. You will sell these goods in EU member states if your customers ultimately approve of them. In order to calculate VAT on purchases and delivery, you might need to register there.
- If you are shipping from an EU country to Northern Ireland for sale, return, acceptance, or similar terms, treat it as your own.
Exemption threshold
Some products and services, which include health care, education, and financial services, may be exempt from VAT.
VAT does not apply to these sales; therefore, there is no “right to deduct.” This indicates that the VAT paid on purchases connected to such transactions cannot be deducted.
You may not need to register for VAT if all or the majority of your taxable purchases or items are non-existent; this situation is known as an exemption from registration.
When you have to register for VAT – how to work it out
In certain cases, you produce taxable inputs in the UK; it is your responsibility to note if:
- Your taxable goods’ worth in the previous 12 months or less exceeds the registration limit at any time at the end of the month.
- You anticipate your taxable inventory will at any moment be worth more than the registration cap for the upcoming 30 days only.
Examples of Exempt supplies
For example,
- Sales, leases, and lease agreements for certain lands and buildings (but not rent for garages, car parks or hotels and holiday accommodation
- Apply for an insurance
- Betting, gambling, and lotteries
- provide credit
- some training and education
- Charity collection
- Subscriptions to specific affiliates
Tips you need to know
- If you want to apply for a registration exemption yet some of your items are subject to VAT, you must be able to convince us that, if you register, your input tax will typically be higher than your output tax. Value-added tax, or income tax, is levied on the products and services you buy for your company. A value-added tax on your account for taxable goods is called an excise tax.
- You won’t be able to claim the input tax you paid on purchases of goods or services for your company if the authority exempts you from listing. If your situation changes, including the type of inventory you give, you must let us know. This is due to the possibility that your right to an exemption has expired.
- If the value of your distance sales has above the threshold and you are required to register, you must notify HMRC within 30 days of the date this occurred.
- Your registration date will be the day your sales exceeded the threshold if you need to register because your distance sales for the entire year or a portion starting on January 1 exceeded the distance sales level.
Where does your reporting obligation start?
The person who sold the business to you is liable for keeping financial records through the selling date.
However, they must give you all the details you want in order to fulfil your VAT requirements. You must gather the facts required to satisfy your VAT duties if the seller asks HMRC for permission to preserve records.
Which trade flow must be reported?
All businesses operating by the Northern Ireland Protocol must submit a VAT return on all gross sales and purchases.
Companies who go beyond the legal limit must additionally supply extra information in the supplemental reports produced by Intrastat. Statistics on trade inside the EU are created using supplementary declarations and projections based on data from VAT return forms details on the most recent Intrastat thresholds.
What data to report
Even if distance sales from Northern Ireland are below the distance selling limit when they arrive in an EU member state, if you are conducting business using the Intrastat threshold, you must report all distance sales other than taxpayers in your Intrastat supplementary return.
Your distance selling to EU members must be registered individually. Consequently, you may keep an eye on your duties to register for VAT on international sales in the EU or the OSS-receiving country.
Frequently asked questions
What are the basic steps to register for VAT in an EU member state?
by Eunice | Dec 14, 2022 | European VAT
Different VAT obligations depend on where you buy from or sell to
In general, so-called “cross-border supplies” should not be subject to VAT in the Member State where the provider is based. However, they typically result in the imposition of VAT in the nation where the client is based or the item is really made.
These supply minimums differ among the Member States. The distance selling thresholds for the EU Member States are released by the European Commission on a regular basis.
Yes, the provider should typically not be taxed while providing items to business clients. The client is required to know whether his customer is a “taxable person” for VAT purposes, that is, whether the customer is a business.
If the client receives a legitimate VAT identification number from another EU member state, it is assumed that this is the case. The database VIES of the European Commission can be used by the client to determine whether such a VAT identification number from another EU Member State is legitimate.
Considerations for VAT
A variety of additional facts need to be considered, such as the kind of commodities delivered, who oversees shipping them, where they are at the time of provision, whether there are any other parties engaged, etc.
All these variables may affect the location of the supply as well as the issue of whether the supply is zero-rated for the supplier. On its website, the European Commission offers some additional details regarding the source of supplies.
Be aware that invoicing and paperwork requirements are more stringent for cross-border transactions than for domestic ones to maintain zero-rated supplies of products. Also possible are additional declaration requirements.
Cross-border VAT within the EU and outside the EU
The client must either charge the VAT of the Member State where the supplier is located or the VAT of the Member State where his customer (consumer) is located for supplies of products to consumers (non-business customers) in another Member State.
If outside the EU In this situation, an export is mentioned. The supply should typically be zero-rated for customs if certain conditions for documentation and customs formalities are completed by the vendor.
Within the EU
When purchasing and receiving services from another EU member state for business purposes, you are required to use reverse charge to calculate and pay VAT on the transaction at the applicable local tax rate, just as if you were the one providing the service.
Normally, you can take this money off later when you submit a VAT return.
Outside the EU
In general, VAT is not charged when providing services to non-EU clients.
However, if the service is utilised in another EU nation, that nation could choose to impose VAT. However, you can deduct VAT on relevant costs such as products or services bought especially for this sale.
When buying/selling services/goods to another business or a final customer
If the services are provided within the EU, VAT is typically charged where the services are rendered. The status of the client receiving the service as well as the type of services offered, nevertheless, will determine this.
A difference must be established between a non-taxable person (a private individual who is the service’s end consumer) and a taxable person operating in that role (a business acting during its business).
VAT is often required where the service was rendered if the client is a private individual who is the final consumer. Most frequently, but not always, this will be the location of the service provider’s headquarters.
In some circumstances, the service provider will use the VAT rate in the Member State where he is established to account for VAT on his services.
However, VAT can be owed in a different member state than the one where the provider is based, depending on the nature of the service.
This is true, for instance, with services related to real estate, transportation of people and/or commodities, and cultural, artistic, sports, scientific, educational, and services for entertainment. VAT is required where the customer is located if the customer is a company working in its official capacity.
VAT must be reported by the customer, not the service provider (Reverse charge).
Be aware that special regulations for billing, paperwork, and declaration must be considered.
Frequently asked question
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Why do certain software suppliers ask for a VAT identification number when I purchase over the internet?
Suppliers of electronic services, such as anti-virus updates, are obliged to charge VAT on the service. If the purchaser of these services is a taxable person, then in certain circumstances, it is the customer rather than the supplier who must account for the VAT.
For this reason, the supplier may ask for the VAT identification number of the customer so that he can confirm whether it is he who must charge the VAT or whether the customer himself will account for the VAT. If the customer does not have a valid VAT number, then the supplier will charge a VAT.
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How can I claim my VAT back after I left the country?
You have to send an application to the authorities in the EU nation where you produce VAT. Some EU nations won’t refund you unless your company is situated in a nation that provides a comparable refund programme to enterprises in that EU nation.
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If I want a refund, how long does it take for HMRC to process a VAT refund?
Refunds are typically made 30 days after HMRC receives your VAT Return. If HMRC has your bank information, your payback will be sent directly to your bank account.
Conclusion
Services that are provided to a client outside of the EU are often zero-rated, and the service provider can typically recoup any associated input VAT.
Transport services, supplies relating to land and buildings, supplies of telecommunications, broadcasting and electronic services, suppliers of means of transportation, supplies of used products, supplies of works of art, etc., are some of the supplies that may be subject to unique regulations.
Be aware that it is likely that special regulations apply to these supplies as well.
