Disclaimer: Link My Books provides technical assistance with setting up tax rules and automating bookkeeping, but we are not a substitute for a qualified tax advisor. Always consult your accountant for UK VAT compliance.
Who this article is for
This article is for UK-based businesses who use online marketplaces (Amazon, TikTok Shop, eBay, Etsy, Walmart) or shopping carts (Shopify, WooCommerce, Square, etc.).
It explains how Link My Books helps you set the right accounts and tax rates during setup, and points out the key differences between marketplace platforms (where VAT may be collected by the platform) and shopping cart platforms (where you remain responsible for VAT).
Key principles
Transaction categorisation
Link My Books groups transactions into categories such as sales, refunds, fees, reimbursements, etc. Correct mapping ensures your bookkeeping and VAT returns are accurate.Marketplace vs shopping cart rules
Marketplaces (Amazon, eBay, TikTok Shop, Etsy, Walmart): In many cases, these platforms are legally required to collect and remit VAT on certain UK sales (for example, low-value imports or sales by non-UK sellers).
Shopping carts (Shopify, WooCommerce, Square): These are not marketplaces, so they do not collect VAT on your behalf. You remain responsible for charging and remitting VAT on all taxable UK sales.
Why this matters
Whether VAT is collected by you or the marketplace determines how sales are treated in your accounts:Seller responsible VAT → sales recorded with output VAT.
Marketplace responsible VAT → sales recorded as zero-rated (since the VAT has already been remitted by the platform).
Guided setup wizard
When you connect a new sales channel in Link My Books, our setup wizard ensures your accounts and tax rates are configured correctly. The steps are:
Set accounts for transaction categories
Use our default account suggestions or customise them to your own chart of accounts.
Categories include sales, refunds, fees, reimbursements, and others.
Confirm VAT status
You’ll be asked to confirm whether your business is VAT registered in the UK.
This determines whether VAT mappings will be applied or whether everything will be set as “no VAT.”
Confirm tax rates
We pre-fill the tax rates based on your channel and VAT status.
For marketplaces, you’ll see some sales categories default to 0% (marketplace collected VAT).
For shopping carts, all UK sales default to standard rate (20%) unless you set product groups for zero/reduced rates.
Fees and other transactions
Marketplace fees and commissions are typically invoiced by non-UK entities, which often fall under the reverse charge mechanism.
Shopping cart fees (like Shopify or Square) are usually invoiced directly and may be subject to VAT depending on the entity location.
Reimbursements, loans, and reserved balances are normally treated as no VAT.
The wizard proposes defaults based on the channel you’re connecting, so you don’t need to worry about manually working out the right treatment for each category.
Summary
Link My Books handles the complexity of UK VAT for different platforms.
Marketplaces often collect VAT on your behalf; shopping carts do not.
Our setup wizard guides you through accounts, VAT status, and tax rates with defaults tailored to each channel.
Once configured, transactions flow through to your accounting software with the correct tax treatment applied, keeping your VAT returns accurate and compliant.
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].