Fiscal Umbrella Accountants
Import VAT and reverse charge for Amazon and Shopify sellers: the two things we fix most often
Two entries in your VAT return decide whether money you have already paid at the border comes back to you. In our experience both are coded wrong more often than they are coded right, and nobody tells the seller until the stock has shipped three times over.
Published 18 October 2026
6 min read
Fasih Khan, Partner, ACCA qualified
Import VAT and reverse charge for Amazon and Shopify sellers sound like two different problems. They end up in the same place: money leaving your company that should have come back on the next return, because the invoice was coded as a cost instead of as VAT.
Our view is simple. If you buy stock from outside the UK and sell it through a marketplace, these two entries are worth more attention than almost anything else in your bookkeeping. Get them right and the cash sits in your account instead of HMRC’s. Get them wrong and it shows up as a margin problem you cannot explain, which is usually how sellers find us.
Below is how we think about both, what the freight agent’s invoice is actually telling you, and the checks you can run on your own books this week.
Where import VAT quietly disappears
When your stock lands, someone pays VAT at the border. Normally that is your freight agent or courier, who then bills you for duty, import VAT, their handling fee and the shipping, all on one invoice. The bookkeeper sees a supplier bill from a logistics company, codes the whole lot to cost of sales, and moves on.
That single decision costs you the import VAT. It is not a cost of your goods. It is VAT you have paid and, if you are VAT registered and the goods are for your business, it is VAT you can reclaim once you hold the right evidence.
The evidence matters as much as the entry. HMRC wants either your monthly postponed import VAT statement or the C79 certificate, depending on how the import was declared. The agent’s own invoice is not enough on its own, because the agent is not the importer and the goods are not used in their business.
So the first question we ask a new e-commerce client is not what their margin is. It is to show us one freight invoice and the statement that should sit beside it. If the statement does not exist, the reclaim has not happened, and we usually find several quarters of it.
Postponed VAT accounting and your cash
Postponed VAT accounting lets you declare the import VAT and reclaim it on the same return, so nothing actually leaves your bank. Pay at the border instead and the money is gone until the reclaim comes round, which for a seller importing every month is a meaningful amount of working capital tied up for no reason.
Two practical points. First, it is chosen on the import declaration, so whoever makes the declaration has to tick the right box. If your agent defaults to paying the VAT and recharging you, nobody at HMRC will correct them. Second, HMRC updated its guidance in 2025 to confirm that where another person imports goods on your behalf, they need your written permission to use postponed VAT accounting. Worth a short email to your agent rather than an assumption.
Then you have to download the statement each month from your customs declaration service account. The figures on the statement are what go on the return, not the figures on the agent’s invoice. Miss a month and the return is wrong in both directions.
HMRC’s own guidance on this sits at gov.uk and is short enough to read.
Import VAT paid at the border is your money sitting with HMRC. Coded to cost of sales it stays there, and the only person who would have noticed is the one you hired to notice.
Reverse charge on Amazon and Shopify fees
The second entry is the one almost nobody asks about. Your Amazon seller fees, your Shopify subscription, your advertising, your apps: many of these are billed from outside the UK. When a business outside the UK supplies services to your UK company and you have given them your VAT number, they charge no VAT. You account for it yourself under the reverse charge, putting the same amount in as output tax and input tax.
On the standard scheme the two entries cancel out, which is exactly why people shrug at it. The return is still wrong if they are missing, your box figures are understated, and if you are ever asked to explain a return, understated boxes are the sort of thing that invites more questions.
Where it stops being neutral is on flat rate. Under flat rate you still have to account for the reverse charge VAT, and you generally cannot recover it, so those marketplace fees carry a real cost that the standard scheme does not create. That is one of several reasons high volume sellers with overseas sales are often on the wrong scheme. We have written about that in flat rate VAT for online sellers is it costing you money.
When the marketplace owes the VAT
There is a third layer that catches sellers who dropship or hold stock abroad. Where goods are outside the UK in a consignment valued at £135 or less and sold to a Great Britain customer through an online marketplace, the marketplace charges and accounts for the UK supply VAT at the point of sale. The marketplace is liable, not you. The limit applies to the whole consignment, not to each item inside it.
The same rules make the marketplace liable for VAT on goods of any value that sit in the UK at the point of sale when the seller is an overseas business. So a seller who has moved their company abroad but kept UK fulfilment is in a different position to one who has not.
What this means in your books is that some of your marketplace sales already have VAT accounted for by the platform and some do not. Treat the gross payout as your sales figure and you will declare VAT twice on part of it.
HMRC and the Treasury consulted during 2026 on extending marketplace liability to UK based sellers holding UK stock. Nothing has changed yet, but if it does it will change how your settlement reports need to be read.
How to check your own books this week
You do not need an accountant to run the first pass. Open your accounting software and look for four things.
- A supplier bill from a freight agent or courier where the full amount, including the import VAT line, has been coded to purchases or cost of sales.
- Any month in the last year with no postponed import VAT statement saved against the return.
- Amazon, Shopify, advertising or app invoices showing no VAT and no reverse charge entry against them.
- Marketplace payouts posted as one lump sum rather than split into sales, fees, refunds and VAT.
The last one is where how to reconcile Amazon and Shopify payouts in Xero with A2X comes in. Once the settlement is split properly, the VAT treatment of each piece becomes visible, including returns and refunds in your VAT return what sellers get wrong.
If your sales go overseas as well as into the UK, the picture on the sales side needs the same care, which we cover in do I charge VAT on sales to overseas customers.
Common questions
Can I reclaim import VAT using my courier’s invoice as evidence?
No. HMRC wants your monthly postponed import VAT statement or your C79 certificate as the evidence for the reclaim. The courier or freight agent’s invoice shows what they charged you, and they cannot reclaim the import VAT themselves because the goods are not used in their business. Keep the statement with the return it relates to.
Does the reverse charge apply to my Amazon seller fees?
Where the fees are billed to your UK company by an entity outside the UK and you have supplied your VAT number, yes. You account for the VAT on both sides of your return. On the standard scheme the entries cancel. On flat rate you still account for it and generally cannot recover it, so the fees carry a genuine cost.
Is postponed VAT accounting compulsory for importers now?
It is optional. You can choose to pay the import VAT at the border and reclaim it later, or declare and recover it on the same return through postponed VAT accounting. The choice is made on the import declaration. If somebody else imports on your behalf, they need your written permission to use it.
Why does my VAT bill feel high when the marketplace already charged VAT?
Because some marketplace sales already have UK VAT accounted for by the platform, including consignments from outside the UK valued at £135 or less sold to Great Britain customers. If your bookkeeping treats the whole payout as your own taxable sale, you declare VAT on part of it twice. Splitting the settlement report fixes it.
Where we stand
Import VAT and reverse charge for Amazon and Shopify sellers are not complicated once the invoices are read properly. They go wrong because a logistics bill looks like a stock bill and a marketplace fee looks like a cost with no VAT on it. Nobody is deliberately getting it wrong, and the money still goes missing.
If you import stock, sell through a marketplace and cannot say offhand where your postponed import VAT statements are, that is the place to start. One seller we work with had around 70 per cent of her sales going overseas on the wrong scheme entirely, which only came to light when we looked at the VAT treatment properly.
Answer a few quick questions and we will tell you whether your setup is worth a closer look, and if it is, the free VAT scheme and tax review comes next.