If you sell a mixture of Standard, Zero-rated, or Reduced-rated goods, and the VAT rates on your settlements in Link My Books are not what you expect, this guide will help you troubleshoot the issue.
1. Are You Using the Product Groups Feature?
A common first step to diagnosing VAT discrepancies, especially with mixed-rate goods, is to check if you are actively using the Product Groups feature in Link My Books.
How to Check if Product Groups are Enabled:
Navigate to Settings: In Link My Books, go to Settings > Settlement Settings.
Check 'Turn on Product Groups': On the 'Settlement Settings' page, check if the 'Turn on Product Groups' option is ticked. If it is, you are actively using the Product Groups feature.
For a deeper understanding of how automatic product grouping by VAT rate works, please refer to our dedicated article: 'Understanding Automatic Product Grouping by VAT Rate'.
2. If You ARE Using Product Groups (and VAT is Incorrect)
If Product Groups are enabled, VAT discrepancies often occur if your individual SKUs (products) are not linked to the correct product group.
What to Check: SKU to Product Group Assignment
First, verify that your SKUs are correctly assigned to the appropriate Product Groups. Go to Inventory > Product Groups in your Link My Books dashboard, then select the 'Show SKUs in this group' against the Product Group.
How to Correct SKU Assignment:
If an SKU is linked to the wrong group, you can change its assignment either:
Manually: From the 'Product SKUs' tab, locate the SKU, and manually select the correct product group from its dropdown menu.
Via Bulk Upload: For a quicker method to update multiple SKUs at once, use the bulk upload option. For more information on using bulk upload, click here.
Important Note on Updates: If you change the product group an SKU is attached to:
Only future settlements and any settlements currently marked as 'ready to send' will be updated with the new VAT rates.
Settlements that have already been sent to your accounting software will not be automatically updated. To reflect these changes for past sent settlements, you would need to Rollback those settlements in Link My Books, ensure you remove the corresponding invoice/journal in Xero/QuickBooks to avoid duplicates, and then re-send them.
3. If You ARE NOT Using Product Groups (and VAT is Incorrect)
If you're not using Product Groups (or if they are not enabled for VAT allocation), VAT discrepancies usually stem from your overall tax mapping settings.
What to Check: Accounts and Taxes Mapping
Review Your Tax Mapping: Verify whether you are using the default tax rates supplied by Link My Books during your initial setup, or if you have identified and set your own custom tax rates.
You can review the tax rates being applied to your settlements from the Accounts and Taxes Mapping option.
4. Amazon Europe Fee Changes — August 2024
If you're comparing VAT figures between settlements from before and after August 2024 and noticing significant discrepancies, the cause may not be a configuration issue in Link My Books — it may be due to Amazon changing the legal entity that invoices fees to UK sellers.
⚠️ What changed in August 2024: Amazon moved the invoicing of seller fees, FBA fees, and storage fees for UK businesses from an EU entity (Amazon Services Europe S.à r.l.) to a UK entity. This changed the VAT treatment from Reverse Charge to standard 20% UK VAT on most domestic fees — but introduced Reverse Charge on international FBA and storage fees for orders fulfilled from non-UK warehouses.
This means that if you compare your fee VAT totals year-on-year (e.g. 2024 vs 2025), they will look very different even if your sales volume hasn't changed. The underlying fees haven't necessarily increased — the VAT treatment has shifted.
What to do:
Check that your Link My Books Accounts & Taxes mappings have been updated to reflect the post-August 2024 fee structure
If your mappings were set up before August 2024 and haven't been updated, your settlements may be applying the old Reverse Charge rates to fees that should now be Standard Rated (or vice versa)
Review our UK VAT Return For Amazon Sellers Post-Brexit article which contains full pre/post August 2024 tax rate tables for each fee type
If you need help updating your mappings to match the new fee structure, contact our support team and we can review your account settings.
5. eBay Fee Categories and VAT Treatment
If you sell on eBay, you may notice fee categories in your Link My Books settlements with names that aren't immediately obvious. These category names come directly from eBay's settlement data and reflect how eBay classifies its fees internally.
Common eBay Fee Category Names
Here are some of the fee categories you may see in your eBay settlements and what they mean:
"Non-eBay delivery fees" — These are delivery charges from third-party carriers (e.g. Royal Mail, Hermes/Evri) where the shipping label was not purchased through eBay's integrated shipping. eBay passes these through in the settlement but they are not eBay's own fees.
"eBay delivery fees" — Shipping label costs for labels purchased through eBay's integrated shipping service.
"Promoted listings fees" — Advertising fees for using eBay's Promoted Listings service to boost product visibility in search results.
"Final value fees" — eBay's standard selling commission, calculated as a percentage of the total sale amount including postage.
"International fees" — Additional fees charged on cross-border sales.
VAT on eBay Fees
The VAT treatment of eBay fees depends on the type of fee:
eBay selling fees (final value fees, promoted listings, etc.) — These are standard-rated at 20% VAT for UK sellers, as eBay charges these from a UK entity.
Non-eBay delivery fees — These may show 0% VAT in your settlement. This is correct in many cases, as the fee is a pass-through from a third-party carrier and the VAT treatment depends on the carrier's own invoicing. If you need to reclaim VAT on delivery costs, you should use the carrier's own VAT invoice rather than the eBay settlement line.
💡 Tip: If you see a fee category in your eBay settlement that you don't recognise, check your eBay Seller Hub under Payments > Finances summary for a breakdown. The category names in Link My Books match eBay's own terminology. If you're still unsure, contact our support team and we can help identify the fee.
⚠️ Important Disclaimer: Consult Your Accountant
The team at Link My Books are happy to provide users with technical assistance in applying tax rules to their Link My Books setup. We are not Tax Advisors and so our advice and suggestions on the application of tax rules cannot be construed as tax advice. We highly recommend that users seek advice from qualified accountants for their tax compliance.
If you have any questions about this article or feedback on how we could make it better please reach out to the support team via the blue chat icon on the bottom right of the page or via email to [email protected].