Who accounts for the VAT on your marketplace sales, you or Amazon?

It is one of the most common questions we field from online sellers across Harrow and the wider London area: a settlement report lands showing VAT collected by Amazon, yet the seller has their own VAT registration and assumed the tax was theirs to declare. So who actually accounts for the VAT on a marketplace sale, you or the platform? The answer is not "always one or the other". It turns on a specific test, and getting it wrong leads to either double-counting the VAT or leaving a gap HMRC will eventually find.

This page is about one thing only: who remits the VAT on a marketplace sale. It is the question that decides what number goes on your return.

The deemed supplier rule in plain terms

Since the post-Brexit rules took effect, an online marketplace can be treated as the seller for VAT purposes even though you never see the platform take title to your stock. HMRC calls this the "deemed supplier" treatment. Where it applies, the sale is split into two legs: you make a zero-rated supply of the goods to the marketplace, and the marketplace makes the onward standard-rated supply to the consumer and accounts for that output VAT itself.

According to HMRC's guidance on overseas goods sold through online marketplaces, the marketplace becomes liable for the VAT in two situations: where consignments of goods valued at £135 or less are located outside the UK at the point of sale, and where goods of any value are already located in the UK at the point of sale but are sold by a business established overseas. In both cases the platform charges and accounts for the VAT, not you.

So the single fact that decides who remits is not the platform's logo on the invoice. It is where the goods are and where the seller is established.

When the marketplace remits, and when you do

Two scenarios cover most of the sellers we advise.

If you are an overseas seller, for example a business established outside the UK that holds stock in a UK fulfilment centre, the marketplace is the deemed supplier on your UK consumer sales. Amazon, eBay or the platform in question collects the 20% VAT at checkout and remits it. Your payout arrives net of that VAT. You do not declare that output VAT again, because it was never yours to declare. You still record the sale, but as a zero-rated deemed supply to the marketplace.

If you are a UK-established seller, the picture is different. The deemed supplier rules do not pull your domestic sales into the platform's hands. You remain responsible for your own VAT compliance on goods you sell to UK customers, the marketplace is not accounting for it on your behalf, and the output VAT belongs on your return in the normal way.

The professional body ICAEW sets out this two-tier split clearly. In its analysis of the deemed reseller rules, ICAEW notes that "marketplaces are 'deemed resellers' responsible for collecting VAT on sales from overseas sellers. They are not responsible for sales from UK-based sellers, who must handle their own VAT compliance." That distinction, overseas versus UK-established, is the hinge the whole question swings on. ICAEW also flags that the government is consulting on extending the rule to all third-party sellers, so this boundary may shift in future Budgets. For now, the established-where test is what governs your current returns.

The B2B carve-out that trips sellers up

There is one exception worth knowing even within a deemed-supply scenario. Where the buyer is itself a VAT-registered business and provides its UK VAT registration number, the marketplace does not charge and account for the VAT at the point of sale. The supply is treated as business to business, and the customer accounts for the VAT under the reverse charge. If your marketplace mix includes trade buyers, you will see these orders behave differently in your reports, and that is by design rather than an error.

Why this matters for your bookkeeping in Harrow and London

For a London-based seller juggling several channels, the practical risk is mechanical. If the marketplace has already remitted the VAT and you declare it again on your own return, you overpay. If the liability was actually yours and you assumed the platform handled it, you under-declare and expose yourself to assessment and interest. Tax filings are not the place for guesswork, so the figures on your return need to be right, not approximately right.

The fix is to map each sales channel to the correct VAT treatment before you reconcile, then make sure your accounting records reflect the deemed-supply split where it applies. Our ecommerce tax and VAT service handles exactly this kind of channel-by-channel mapping, and for sellers using fulfilment by Amazon our Amazon FBA accountants reconcile settlement reports so the deemed-supplier sales and your own taxable sales land in the right boxes.

A note on the registration threshold

One thing the deemed-supplier rule does not change is when you must register for VAT in the first place. The "who remits" question and the "must I register" question are separate, and confusing them is a common error. If you are working out whether your turnover has crossed the registration line, that is covered in our Shopify VAT registration threshold guide, which walks through the current £90,000 threshold and what counts toward it. This page assumes you are already registered, or close to it, and simply need to know who carries the VAT on each marketplace sale.

Not sure which sales are yours to declare?

If your settlement reports and your VAT return are not telling the same story, the answer is usually a deemed-supplier sale being counted in the wrong place. Send us your details through the form on this page and we will look at how your marketplace VAT is being handled and tell you, channel by channel, exactly who should be accounting for it.