Ecommerce Accountants for Amazon, Shopify and Online Retail
Ecommerce Accountants UK: Amazon FBA, Shopify and Online Retail
Your Shopify dashboard shows one revenue figure. Your bank shows a smaller one. Your VAT return shows a third. Only one of them is right, and getting it wrong is what puts online sellers in front of HMRC. So which number is your real turnover?
Merit is a team of ecommerce accountants UK sellers come to when the numbers stop making sense. We act as an Amazon FBA accountant UK sellers trust and as a Shopify accountant UK brands recommend. We are Chartered Accountants and Chartered Tax Advisers, led by a Chartered Tax Adviser who has worked inside HMRC.
That last point matters more than it used to. HMRC no longer waits for your tax return to find out what you sold. Online marketplaces report seller data to HMRC every year, including your name, your total income on the platform, a quarterly breakdown and the fees the platform deducted. The first reports, covering the 2024 calendar year, were due with HMRC by 31 January 2025. HMRC then compares that data to what you filed.
Do you charge VAT on sales through Amazon or Shopify?
If you are a UK established business selling your own goods, yes. You charge the VAT, you account for it, and you pay it. Amazon, eBay, Etsy and Shopify do not do this for you and they do not become liable for it. VAT on ecommerce sales UK side is your obligation, not the platform’s.
The confusion comes from the marketplace deemed supplier rules, which do exist but are narrower than most sellers think. They apply where:
- An overseas seller has goods already located in the UK and sells them to a UK consumer through an online marketplace. The marketplace is treated as making the supply and accounts for the UK VAT. The seller makes a zero rated deemed supply to the marketplace.
- Goods are outside the UK at the point of sale in a consignment worth £135 or less and are sold through a marketplace. The marketplace charges and accounts for the VAT at the point of sale.
In both cases the trigger is that the seller is not established in the UK. A UK company selling its own stock from a UK warehouse is outside these rules entirely.
When do you need to register for VAT as an online seller?
You must register once your taxable turnover in any rolling 12 month period exceeds £90,000, or when you expect to exceed £90,000 in the next 30 days alone. Both figures still apply for 2026/27. The deregistration limit is £88,000. Note that the test is a rolling 12 months, not your accounting year.
Here is the point that catches sellers out almost every week. Your gross sales count towards the threshold. Your payout does not.
HMRC will backdate your registration to the date you should have registered. You then owe output VAT on sales where you never charged VAT. On £8,400 of VAT inclusive monthly sales that is £1,400 a month. Six months of late registration is £8,400 of VAT straight out of your margin, before HMRC adds a failure to notify penalty and interest.
Is the VAT Flat Rate Scheme worth it for a goods seller?
Usually not. You can join if your VAT taxable turnover is £150,000 or less excluding VAT, and you then pay a fixed percentage of your VAT inclusive turnover instead of the normal calculation. The catch is that you cannot reclaim VAT on purchases, apart from certain capital assets over £2,000.
Why do your Shopify payouts never match your accounts?
Because a payout is not revenue. It is what is left after the platform has taken and added several things at once. A single Shopify, Amazon or Etsy deposit can be net of platform and payment fees, refunds, chargebacks, shipping you collected from customers, gift cards you sold, and sales tax the platform withheld and remitted for you.
Post the deposit as sales and every one of those items disappears into a single wrong number.
| Line | Amount | Where it belongs |
|---|---|---|
| Gross UK sales including VAT | £12,000 | Turnover and output VAT |
| Shipping collected from customers | £480 | Turnover and output VAT |
| Gift cards sold | £250 | Deferred income, not revenue yet |
| Refunds | (£950) | Reduces turnover and output VAT |
| Chargebacks | (£120) | Reduces turnover and output VAT |
| Platform and payment fees | (£420) | Expense with recoverable input VAT |
| Overseas sales tax withheld | (£180) | Not UK turnover, not your VAT |
| Net payout to bank | £11,060 | Bank receipt only |
Repeat that month after month and your accounts show £132,720 of turnover for the year while you actually sold £149,760. HMRC’s marketplace data says £149,760. You are £17,040 apart on a number HMRC already holds.
You also under declare output VAT, because £11,060 of assumed VAT inclusive sales gives £1,843 instead of the correct £1,922, and you lose the input VAT on £420 a month of platform fees.
The fix is a summary journal, not manual guesswork. Tools such as A2X and Link My Books read the platform settlement data and post a journal that splits every line out correctly and reconciles precisely to the amount that hit your bank. We use them because the alternative is accounts that do not tie to the bank and a VAT return built on the wrong figure.
What happens when you import stock into the UK?
Two rules decide the treatment, and the dividing line is £135 of consignment value.
- Consignments of £135 or less sold to UK customers from outside the UK: VAT is charged at the point of sale rather than at the border.
- Consignments above £135: normal import rules apply, so customs duty and import VAT are due on importation.
Import VAT is charged on the customs value plus any duty, plus freight and insurance to the point of entry. Customs duty is charged on the customs value and is not recoverable, so it is a real cost that belongs in your stock valuation.
Postponed VAT accounting lets you declare that £8,520 and reclaim it on the same VAT return instead of paying it at the border and waiting to recover it. It is optional, needs no approval, and you cannot change your mind after the import declaration is submitted. On four containers a year that is roughly £34,000 of working capital you never lend to HMRC.
How do you sell into the EU after Brexit?
The old country by country distance selling thresholds of 35,000 euros and 100,000 euros were abolished on 1 July 2021, along with the 22 euro low value import relief. Two schemes replaced them.
One Stop Shop OSS VAT
The One Stop Shop covers business to consumer sales of goods already inside the EU, moving from one member state to a consumer in another. You file one return covering every EU country instead of registering in each one.
Import One Stop Shop IOSS
The Import One Stop Shop covers goods shipped from outside the EU to EU consumers in consignments not exceeding 150 euros. You charge EU VAT at checkout and report it on a single monthly return, and your parcels clear customs without your customer being asked for VAT on the doorstep. Consignments up to 150 euros are also relieved of customs duty, though VAT is still due.
A UK business generally cannot register for IOSS on its own. The EU position is that a seller established outside the EU must appoint an intermediary established in the EU, who registers and files on its behalf. Some member states have taken a different view because of the UK and EU mutual assistance provisions, so the practical answer depends on where you are shipping and who your intermediary is.
Commercially, that means an ongoing cost and a guarantee requirement in some countries. It is worth it if EU parcel volume is real. It is not worth it for a handful of orders a month, and we will tell you which you are.
Does Amazon FBA create VAT registrations abroad?
Yes, and this is the single most expensive surprise in Amazon FBA VAT. Storing stock in a fulfilment centre in another country generally creates a VAT registration obligation in that country, because non established businesses do not get a domestic registration threshold. One sale from that warehouse is enough.
Join Pan European FBA and Amazon moves your stock to wherever demand is. You can wake up with stock in Germany, France, Italy, Spain, Poland and the Czech Republic, and a registration obligation in each.
The practical consequence is a local registration, local filings and a local fiscal representative in some states, per country, every year. Multiply annual compliance cost by six and the programme can cost more than the extra sales generate. OSS reduces the number of returns you file, but it does not remove a registration triggered by holding stock.
Can you measure profit without a stock figure?
No. This is the most common reason an online seller’s accounts are simply wrong. Inventory and cost of goods accounting is not optional detail, it is the difference between profit and a guess.
If you expense stock when you buy it, your profit moves with your purchasing decisions instead of your sales.
You planned around £80,000. You actually made £110,000. That is £30,000 of unplanned profit and, at the 19% small profits rate, £5,700 of Corporation Tax you have not set aside.
Landed cost makes it worse. Stock should be valued at what it cost to get it onto your shelf, including inbound freight and import duty. If that £45,000 of closing stock carried £6,300 of freight and duty, its true value is £51,300, understating profit by a further £6,300 and Corporation Tax by £1,197.
Corporation Tax is 19% on profits up to £50,000 and 25% on profits above £250,000. In between, marginal relief applies and the effective rate on each extra pound is 26.5%. Move £10,000 of profit out of that band legitimately and you save £2,650. You cannot plan any of this without a reliable stock figure.
What does Making Tax Digital mean for online sellers?
VAT is already digital. Records must be kept in software and returns filed from it.
Income Tax is now following. MTD for Income Tax went live from April 2026 for sole traders and landlords with qualifying income over £50,000. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028. Qualifying income is measured on gross income before expenses, which is why a marketplace seller with thin margins can be caught by a £20,000 test on very little profit.
Why sellers choose Merit as their ecommerce accountants
Three things separate us, and none of them is software.
We are Chartered Tax Advisers as well as Chartered Accountants. Every set of accounts is reviewed by someone whose training is tax, not just compliance. In most cases, the tax we save our clients exceeds the fee they pay.
We are led by a Chartered Tax Adviser with direct experience working inside HMRC. When marketplaces are handing your gross sales data to HMRC every January, it helps to have someone who knows what an Inspector does with it, which mismatches get picked up, and how to present a position so it holds.
Our partners have built their own businesses from zero to £1m plus turnover. We have carried stock, paid for advertising that did not work and waited on a payout. When we say Pan European FBA is not worth it for you yet, that is an operator’s answer, not a textbook’s.
- Three UK offices: London WC1H, Stalybridge SK15 near Manchester, and Potters Bar EN6 in Hertfordshire.
- Fixed fees agreed in advance, so a busy quarter does not become a bigger bill.
- Over 130 five star Google reviews.
- A free first meeting, with a Chartered Tax Adviser, not a salesperson.
Ecommerce accounting and VAT questions we are asked most
Do I need to register for VAT if I only sell on Amazon?
Yes, if your taxable turnover exceeds £90,000 in any rolling 12 month period. Amazon selling on your behalf does not change that. Crucially, the test uses your gross sales, not the money Amazon deposits after fees. Sellers routinely believe they are under the threshold because they are watching their bank account. Check gross sales in your Amazon settlement reports every month.
Does Amazon or eBay pay my VAT for me?
Not if you are a UK established business selling your own goods. The marketplace deemed supplier rules apply mainly where the seller is not established in the UK, or where goods worth £135 or less are outside the UK when sold. Outside those situations, you charge the VAT, you report it and you pay it. If you assumed the platform was handling it, get the last four quarters reviewed now.
My Etsy shop started as a hobby. Does it count for tax?
If you are buying or making goods with the intention of selling them at a profit, you are trading, and it counts from the first sale. Etsy reports seller data to HMRC annually. The reporting exemption is narrow: fewer than 30 sales of goods in a calendar year and under 2,000 euros received. Above that, HMRC receives your figures whether you file or not.
Do I really need A2X or Link My Books?
If you sell any real volume on a marketplace, yes. They read the settlement file and post a journal splitting sales, fees, refunds, shipping and withheld tax, then reconcile it exactly to the deposit. Done by hand this takes hours per month and is error prone. Done not at all, your turnover, your VAT return and your profit are all wrong. We work with both tools.
I store stock in Germany for FBA. Do I need a German VAT number?
Almost certainly, yes. Holding stock in a country generally creates a local VAT registration obligation there, and non established businesses do not get a domestic threshold to shelter behind. One sale from that warehouse is enough. Register late and you face local back VAT, penalties and interest, and Amazon can suspend your account in that marketplace until you produce a valid number.
Sole trader or limited company for an online store?
It depends on profit level and how much you draw. A company pays Corporation Tax at 19% up to £50,000 of profit, 25% above £250,000, and an effective 26.5% in between. A sole trader pays Income Tax and National Insurance on all profits and is being pulled into quarterly MTD reporting. We model both on your actual numbers before you decide.
Can you fix VAT returns and accounts that were filed wrong?
Yes, and it is a large part of what we do. We rebuild the settlement data, restate turnover on a gross basis, correct output VAT, bring in a proper stock valuation and then deal with HMRC. Coming forward voluntarily, with workings that stand up, gives you a materially better outcome than waiting for HMRC to open an enquiry.
What will this cost?
A fixed fee, agreed before we start, based on your platforms, transaction volume, number of VAT registrations and whether we are also doing bookkeeping and management reporting. You will know the figure before you commit. The first meeting is free, and we will tell you in it whether we can save you more than we charge.
Ready to see what your real numbers look like?
Bring three things to a free first meeting and we can usually tell you where you stand inside an hour.
- Your last 12 months of gross sales by platform, taken from settlement reports, not your bank.
- Your most recent VAT return and the figures behind it.
- Your current stock value, and whether it includes freight and duty.
We will tell you whether you have passed the VAT threshold, whether your EU position needs OSS or IOSS, whether an overseas registration is already overdue, and what your profit actually is. If your position needs correcting, we will tell you what that looks like before you spend anything.
Last reviewed: August 2026.
