Usually, if HMRC requests more information during a VAT investigation they want one of two things:
In this article, we'll cover how to handle both of those.
How to provide copies of the actual VAT Invoices for any VAT on expenses you've claimed
If HMRC are requesting Input VAT Invoices, what they want is evidence that you have paid the VAT you are reclaiming on any expenses you have incurred.
Using Link My Books entries and audit data
Sometimes they will be happy with the Link My Books summary entries, so you can start by downloading those directly from inside Xero or QuickBooks as a PDF invoice and explaining that you are using Link My Books to generate breakdowns of your payouts from sales channels.
Explain that our entries include a full breakdown of all sales, refunds, fees and any taxes incurred on those items.
You can also download the zip file we attach to each invoice in Xero (or via the link in the notes for QuickBooks journals) which contains a file names "Audit" which shows a list of all the individual transactions that made up that payout as well as how and why we grouped them the way we did in our summary entries.
What if HMRC wants actual VAT incomes for my sales channel expenses?
You can download your VAT invoices from each of your sales channels directly from within your sales channel admin directly. These are generally generated monthly by the sales channels and will line up with the figures Link My Books has generated in your Xero or QuickBooks account.
Amazon
To download VAT invoices for your fees from Amazon, use the following instructions:
Navigate to Reports > Tax Document Library on Amazon Seller Central
Under the Seller Fee Invoices tab you'll see all your VAT invoices
You'll only need to download Product Ads VAT Invoices from Amazon.co.uk since they are the only ones that incur 20% VAT. (As long as you have provided Amazon with your VAT number that is)
eBay
To download VAT invoices for your fees from eBay, use the following instructions:
Go to the Payments tab in Seller Hub or Payments in My eBay.
Select Reports.
Select the Invoice tab. You'll see the list of available Tax invoices by month.
To download a report for a specific month, select Summary Download or Detail Download.
Shopify & Etsy
Shopify and Etsy invoice for their fees from an Irish legal entity so their fees are all Reversed Charged for VAT, so it's unlikely HMRC would want copies of their invoices since the default tax rates in Link My Books for their fees is also Reverse Charged so no input VAT would have been claimed.
How to provide a detailed transaction-level breakdown of your sales for a period of time
Sometimes they will be happy with the Link My Books summary entries, so you can start by downloading those directly from inside Xero or QuickBooks as a PDF invoice and explaining that you are using Link My Books to generate breakdowns of your payouts from sales channels.
Explain that our entries include a full breakdown of all sales, refunds, fees and any taxes incurred on those items.
You can also download the zip file we attach to each invoice in Xero (or via the link in the notes for QuickBooks journals) which contains a file names "Audit" which shows a list of all the individual transactions that made up that payout as well as how and why we grouped them the way we did in our summary entries.
What if HMRC are requesting something else?
If you tell us what HMRC are requesting specifically we will do our best to provide the data they need or point you in the right direction of where to get it from.
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].