New HMRC Security Measures: The ‘0990’ Requirement
HMRC has stepped up its game to fight fraud. As of late January 2026, there is a new hurdle for anyone registering for VAT. If you are a new seller or moving your business structure, you must take note of the VAT registration application reference number.
This number, which always starts with ‘0990’, is now a mandatory requirement when you enroll for VAT services on your online business tax account. Why the change? Fraudsters were previously intercepting legitimate VAT numbers and opening accounts before the actual business owners could. This caused massive headaches and delays in getting VAT returns filed.
By requiring the ‘0990’ reference, HMRC ensures that only you—the rightful owner—can access your online services.
Pro Tip: Keep this number safe. If you lose it, the recovery process can be tedious. If we are handling your VAT return services, make sure to forward this reference to us immediately so we can get your digital dashboard synced without delay.
VAT Obligations for Direct Ecommerce Sales
If you are a non-UK seller or a UK business selling directly to customers through your own website, the rules around the £135 threshold remain the “golden rule.”
For Orders Under £135
When you sell goods to a UK customer and the total value is £135 or less, you must charge VAT at the point of sale (the checkout). You are then responsible for reporting and paying this VAT to HMRC via your quarterly return. This is why having expert ecommerce accountants is vital: calculating these micro-transactions across thousands of orders is a recipe for a headache if you don’t have the right software integrations.
For Orders Over £135
When the order value exceeds £135, the rules shift. Standard import VAT and potentially customs duties apply. Usually, the customer (the importer of record) pays these to the courier before delivery, unless you have opted for a “Delivered Duty Paid” (DDP) shipping model.
Managing the difference between these two categories is essential. If you get it wrong, your customers might be hit with unexpected “handling fees” from Royal Mail or DPD, which leads to bad reviews and returned items.
The Marketplace Effect: Selling on Amazon and eBay
If you primarily sell through Online Marketplaces (OMPs) like Amazon, eBay, or Etsy, your VAT life is slightly simpler, but you still have responsibilities.
For goods stored in the UK and sold by non-UK sellers, the marketplace is generally responsible for collecting and remitting the VAT to HMRC for orders under £135. However, don’t let this lull you into a false sense of security. You still need to maintain impeccable records. HMRC can, and will, audit your marketplace reports to ensure the “deemed supplier” rules are being followed correctly.
Understanding the difference between B2B and B2C business models is also crucial here. If you sell to another UK business (B2B), the marketplace rules might not apply in the same way, and you may need to issue a full VAT invoice.
EU Businesses Selling to the UK: The Reverse Charge Exemption
Are you an EU-based business shipping to UK customers? There is an important distinction to remember regarding the reverse charge exemption.
Registered EU businesses can often remove VAT from the checkout when selling to UK businesses that provide a valid VAT number. This keeps the B2B trade flowing smoothly. However, remember that this exemption is a “one-way street” in this specific context: it applies to EU-to-UK shipments.
If you are a UK business selling back into the EU, you have to navigate the EU’s IOSS (Import One-Stop Shop) rules, which are the mirror image of the UK’s £135 rules.
Looking Ahead: Mandatory E-Invoicing in 2029
The UK government is moving toward a fully digital tax ecosystem. While “Making Tax Digital” (MTD) is already here for VAT, the next big leap is mandatory e-invoicing.
The government has confirmed that by 2029, all VAT invoices must be digital. This means no more PDF invoices sent via email that require manual entry. Instead, software will “talk” to software using a standardized format.
What should you do now?
- Stay Informed: Keep an eye on the “Budget 26” announcements. The government will publish a roadmap later this year.
- Audit Your Tech: Are you still using spreadsheets? It’s time to move to cloud-based systems like Xero or QuickBooks.
- Consult Your Accountant: We are already prepping our clients for this transition. Being early adopters will save you from the 2029 scramble.
Essential VAT Rate Reminders
It sounds basic, but applying the wrong VAT rate is one of the most common reasons for HMRC penalties.
- Standard Rate (20%): Most ecommerce goods (electronics, fashion, home goods).
- Reduced Rate (5%): Specific items like children’s car seats or certain energy-saving materials.
- Zero Rate (0%): Most books, children’s clothes, and most food items.
Double-check your Shopify or Amazon tax settings. If you accidentally charge 0% on a 20% item, that 20% comes out of your profit margin when HMRC comes knocking.
Why Ecommerce Sellers Trust Professional Support
Navigating UK tax isn’t something you have to do alone. Professional support can help you scale without the fear of an HMRC audit. From setting up your UK limited company accounting to managing complex cross-border VAT returns, expert guidance and the right tools make all the difference.
Don’t worry about the complexities of “deemed supply” or “reverse charges.” Focus on sourcing great products and growing your brand. Let professionals handle the numbers.
