The numbers look healthy. The bank account tells a different story. Here’s why and what to do about it.
Why the numbers never seem to match
Here’s what most people miss: both Amazon FBA and Shopify pay you net of fees. Neither platform hands you your gross revenue. What lands in your business bank account is already stripped down, referral fees removed, gateway charges deducted, VAT potentially held back and if you record that deposit as your sales figure, your whole profit and loss statement is quietly lying to you.
HMRC doesn’t care about your net bank deposits. They want to see your gross sales, with the deductions listed separately as business expenses. That distinction is everything, especially now, with MTD obligations continuing to expand in 2026 and HMRC actively cross-referencing platform sales data with submitted VAT returns.
Critical VAT threshold
Your rolling 12-month Taxable turnover determines VAT registration, not your net payout. If Amazon deposits a total of £74,000 but your gross sales were £93,000, you’ve crossed the £90,000 threshold and should already be registered. This is the most common trigger for retrospective HMRC assessments we see.
Amazon FBA accounting for the settlement trap
Every two weeks, Amazon fires a payout into your bank. Sellers look at that number, call it revenue, and move on. Honestly, I understand why it feels like income; it arrives like income. But it isn’t.
That settlement is actually a collapsed summary of dozens of line items, compressed into a single transfer. To account for it correctly, you have to pull it apart.
Real example
A client came to us in late 2025, a Midlands-based seller doing around £18,000 a month on Amazon. She’d been recording her fortnightly deposits as sales in Xero for two years. Not because she didn’t care. Because nobody had told her differently.
When we pulled her actual settlement data, her gross sales were running about 38% higher than her recorded revenue. She’d been underpaying VAT for eight quarters. The correction wasn’t catastrophic, but it required a voluntary disclosure to HMRC, a back-payment, and a very stressful two months. The kicker? A proper connector tool would have cost her about £20 a month to avoid the whole thing.
What your Amazon settlement actually contains: gross sales, referral fees (typically 8–15%), FBA fulfilment and storage charges, sponsored products spend, VAT collected at checkout, long-term storage penalties, and an account-level reserve for returns. The net figure is what’s left. That’s not your revenue. The gross sales figure is.
Are you recording your Amazon deposits as sales? If yes, when did you last check what those deposits actually contain?
There’s also the inventory angle. Stock sitting in Amazon’s fulfilment centres, unsold, is your asset. It belongs on your balance sheet, valued at landed cost, which means the factory price plus freight, UK customs duties, insurance, and agent fees. Record only the unit invoice price, and your margin calculation becomes a fiction. Your Corporation Tax liability, too.
Shopify accounting for the fragmented flow
Shopify’s accounting challenge is different, but it’s just as real. Where Amazon gives you one messy settlement to untangle, Shopify sends revenue in from six directions at once.
Shopify Payments (which runs on Stripe) settles on one schedule. PayPal on another. Klarna and Clearpay are on different cycles again. Each gateway charges different fees, holds reserves differently, and reports data in different formats. Pulling all of that together into a coherent set of accounts, especially before a quarterly VAT return, is where errors compound fast.
“On Shopify, you are the merchant of record. The platform builds the shop. The compliance is entirely yours.”
Here’s something that surprises many Shopify sellers unlike Amazon, which handles VAT collection for many overseas sellers as a marketplace facilitator, Shopify doesn’t do that for you. If your tax settings are wrong, if you’re charging 20% VAT on zero-rated children’s clothing, or missing VAT on taxable lines, HMRC won’t penalise Shopify. They’ll penalise you.
In my experience, Shopify sellers tend to have cleaner gross revenue figures (because the checkout is straightforward) but messier net reconciliations (because of the multi-gateway chaos). Amazon sellers tend to have the reverse problem. Both end up in the same place: inaccurate books, if the right tools aren’t in place.
VAT obligations in 2026 are messier than you think
The UK VAT registration threshold sits at £90,000 on a rolling 12-month basis. That hasn’t changed. What has changed is how rigorously HMRC is enforcing it.
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Area |
Amazon FBA
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Shopify
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VAT collection
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Handled for non-UK sellers via marketplace facilitator rules; UK sellers still responsible via VAT Calculation Service
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100% seller responsibility: you configure product tax codes and rates
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VAT invoices
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Auto-generated via Seller Central for eligible orders
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Requires a third-party app like Sufio for compliant UK invoices
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EU sales (post-Brexit)
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Integrated IOSS/OSS support via Pan-European FBA
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Seller must independently register for IOSS, or EU customers get surprise customs charges
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Postponed VAT Accounting
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Available for import shipments to FBA centres
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Available — but requires separate setup with your accountant
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HMRC data access
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HMRC receives platform sales data directly in 2026 and auto-compares it to your returns. Discrepancies flag compliance checks — automatically.
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MTD update April 2026
MTD for Income Tax now applies to sole traders earning above £50,000 gross. That means quarterly digital updates to HMRC on top of your existing MTD for VAT obligations. If you’re operating as a sole trader and approaching that threshold, talk to your accountant now, not in March.
Software that actually solves this
Right, let’s get practical. Spreadsheet-heavy workflows increasingly create reconciliation and compliance risks. Under MTD, every step from your platform to your HMRC return has to be a clean, unbroken digital chain. Any point where a human manually types a number from one screen into another breaks that chain.
Here’s the stack we recommend to UK e-commerce sellers at SKZ Accountants, broken down by what each layer does:
Cloud accounting
Xero
The most widely used MTD-compliant platform among UK e-commerce sellers. Strong bank feed, clean HMRC API integration, and handles multi-currency well.
From £16/mo
Cloud accounting
QuickBooks Online
More visual interface. Good mobile app. Preferred by sellers who want margin visibility at a glance without pulling detailed reports.
From £14/mo
Platform connector
A2X
Strips Amazon settlement data into clean journal entries, gross sales, fees, VAT, and refunds, all separated. Posts directly to Xero or QBO. Saves 10–20 hours a month.
From £19/mo
Platform connector
Link My Books
Handles both Amazon and Shopify. Good for multi-channel sellers who don’t want two separate connector tools. Slightly more affordable entry price.
From £10/mo
Inventory management
Linnworks
Single source of truth across Amazon, Shopify, and eBay. Essential once you’re managing more than a handful of SKUs across channels.
From £449/mo
Inventory (Amazon-focused)
Veeqo
Now owned by Amazon. Deep FBA integration is the best option if Amazon is your primary or only channel. Free to use, which is genuinely unusual.
Free
The golden rule
Your connector software (A2X or Link My Books) is the most important investment in this stack, more than the accounting platform itself. It’s the layer that turns messy platform data into clean, compliant bookkeeping. Without it, your accountant is spending billable hours doing detective work instead of strategy.
The honest verdict
If you’ve read this far, you already know the honest answer: both platforms create real accounting complexity. They just create different kinds of complexity.
Amazon gives you one settlement to reconcile, but it’s dense, layered, and full of hidden deductions. The challenge is forensic. You’re unpicking a web of fees to find your actual profit.
Shopify gives you cleaner individual transactions, but scattered across five payment gateways with different timings, fees, and reporting formats. The challenge is consolidation. You’re stitching a fragmented picture back together.
My honest take
The sellers who struggle aren’t the ones who chose the “wrong” platform. They’re the ones who set up the platform, got the shop running, and assumed the money side would sort itself out. It never does.
Automate the data flow first, before you scale. A £20 connector tool and a proper chart of accounts will save you far more than any conversion rate optimisation you’ll do this year. And it’ll save your accountant and, therefore, you a lot of money too.
“I didn’t know the software wasn’t syncing” is not a defence HMRC accepts. It never has been. In 2026, with automated data sharing between platforms and the tax authority, it’s even less of one.
And if you’re sitting on messy books right now, mixed-up deposits, unreconciled settlements, VAT returns prepared without proper reconciliation, the right move isn’t to panic. It’s to get it sorted before it sorts you.
Speak to SKZ Accountants’ e-commerce specialists in Ilford
We work with UK online sellers across Amazon FBA, Shopify, and multi-channel operations. From MTD-compliant VAT returns to monthly reconciliation and Corporation Tax, we build the financial systems your business needs to scale without the HMRC headaches.
SKZ Accountants
Specialist accountants in Ilford, East London. We work exclusively with UK e-commerce businesses, Amazon FBA, Shopify, and multi-channel sellers who want accurate books, compliant VAT returns, and a financial setup built for growth.
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