TITLE: UK Marketplace VAT: Prepare for Platform-Level Changes and Strengthen Your Ecommerce Accounting
UK marketplace VAT rules are under review. At the same time, HMRC is using more platform data to test whether ecommerce records are complete and accurate. This week, you should focus on preparing your systems for greater platform-level VAT accountability while keeping growth decisions grounded in reliable accounting data.
Prepare now for proposed UK marketplace VAT changes
On 23 June 2026, HM Treasury and HMRC published a consultation on extending online marketplace VAT liability. The consultation closed on 18 August 2026, and the government response is pending.
The proposal would extend existing online marketplace rules to certain sales made by UK-based businesses where the goods are in the UK at the point of sale. The policy is aimed at reducing VAT non-compliance and creating a more consistent position between online sellers and high-street businesses.
The proposal is not yet law. However, sellers should prepare because the likely operational impact could be significant.
The consultation considers two main ways to reduce the impact on smaller businesses:
- A Minimum Platform Threshold (MPT). The lead proposal is £90,000 per platform.
- A possible VAT rate relief for UK businesses below the VAT registration threshold.
The proposed £90,000 MPT would apply separately to sales made through each platform. It would not replace the normal VAT registration rules. Your total taxable turnover would still need to be monitored across all sales channels.
Under the current HMRC VAT threshold guidance, you generally need to register for VAT when your taxable turnover exceeds £90,000 in a rolling 12-month period. The current optional deregistration limit is £88,000.
Understand the proposed deemed supply
For VAT-registered businesses, the consultation currently envisages a deemed zero-rated supply between the seller and the online marketplace for relevant sales. The marketplace would then charge VAT to the consumer at the applicable rate and account for it on its own VAT return.
This could change how you record marketplace sales.
You may no longer hold the output VAT collected on certain marketplace transactions before paying it to HMRC. Instead, the platform may collect and account for that VAT directly. This could affect:
- Your settlement reports.
- Your VAT return coding.
- Your cash-flow forecasts.
- Your treatment of marketplace fees.
- The way you reconcile sales to bank receipts.
The consultation does not propose changing the VAT rate applicable to the goods. If a product is already zero-rated, it would remain zero-rated. The proposed deemed zero-rated supply is an accounting mechanism between the seller and the platform. It is not a general zero-rating of all marketplace sales.
The government is also considering whether to exclude second-hand goods sold by businesses from the extended rules or include them while preventing marketplace sales from using the Second-hand Margin Scheme. No final decision has been made.
If you sell refurbished electronics, used clothing, collectibles, or other second-hand products, keep purchase evidence and margin calculations separately. This will help you respond quickly when the final rules are published.
Audit every platform before the rules change
Do not wait for a government response before checking your data. Start with a platform-by-platform review.
Build a complete seller data file
For every sales channel, record:
- Legal entity name.
- Trading name.
- Registered business address.
- VAT registration number.
- Marketplace account owner.
- Bank account details.
- Warehouse and inventory locations.
- Countries where customers are based.
- Whether the platform collects VAT, GST, or sales tax.
- Whether the platform reports gross sales, net settlements, or both.
Keep these details consistent. Differences between your accounting records, marketplace profile, VAT registration, and bank information can create avoidable questions during a compliance check.
Consolidate sales across all channels
Do not rely on splitting sales across Amazon, Shopify, eBay, Etsy, TikTok Shop, or other platforms to remain below a threshold. The consultation specifically recognises the risk of businesses disaggregating sales across multiple online marketplaces or accounts.
Your internal reporting should show:
- Total sales across all platforms.
- Sales by individual platform.
- Sales through your own website.
- Sales by customer location.
- Sales by inventory location.
- Tax collected by the platform.
- Returns, refunds, cancellations, and chargebacks.
An amazon seller accountant uk can help you separate Amazon settlements from underlying customer sales. A provider supporting shopify accounting uk can also help you distinguish Shopify order data, payment processor settlements, and actual bank receipts.
Reconcile VAT returns to platform reports
Your VAT return should be supported by records that explain the difference between:
- Gross customer orders.
- Discounts and promotions.
- Refunds and returns.
- Platform commissions.
- Fulfilment charges.
- VAT collected by the platform.
- Currency conversion adjustments.
- The final settlement paid to your bank.
This is central to effective ecommerce bookkeeping uk. A bank-feed balance alone is not enough. It does not show what was sold, where it was sold, or which tax was collected before settlement.
Expect more data-driven HMRC compliance checks
HMRC increasingly uses information from marketplaces and digital platforms to identify inconsistencies. Digital platform reporting also means that data held by platforms may be compared with information in tax returns and VAT records.
This does not mean every difference is an error. Timing, refunds, currency conversion, and platform fees can all create legitimate variations. However, you must be able to explain those variations.
Complete this weekly control:
- Download marketplace sales and settlement reports.
- Check that the legal entity and VAT number are correct.
- Match orders to settlement periods.
- Review unusual refunds and chargebacks.
- Confirm that platform VAT figures agree with your VAT working papers.
- Investigate unexplained differences before filing.
Maintaining this process will reduce year-end corrections and make any HMRC information request easier to manage.
Use weekly numbers to control growth
Good accounting does more than support compliance. It shows whether growth is creating value or simply increasing activity.
Review these measures every week.
Measure contribution margin by SKU, channel, and country
Revenue is not profit. Calculate the contribution margin after product cost, fulfilment, platform fees, advertising, payment fees, returns, and delivery costs.
Compare performance by:
- Product SKU.
- Amazon marketplace.
- Shopify store.
- Country.
- Fulfilment location.
- Advertising campaign.
This helps you identify products that generate sales but consume cash.
