Accountants for UK E-commerce and Retail Businesses
Most e-commerce sellers do not have a profit problem. They have a visibility problem. The Shopify dashboard says one thing. Amazon Seller Central says another. Stripe shows a third figure. By the time fees, refunds, chargebacks, marketplace deductions and VAT come out, the headline revenue number is nothing like what actually hits the bank. And that is before EU VAT, US sales tax, or the £135 marketplace rule starts complicating things.
We make the numbers make sense.
NDCA is an ACCA-regulated accountancy practice working with UK e-commerce sellers, multi-channel retailers, and physical-store businesses, working primarily on Xero. We charge a fixed monthly fee so your bookkeeping, VAT and year-end are managed every month, with numbers you can actually trust.
Contact us today for a free consultation to walk through your situation.
The tax issues that catch e-commerce sellers out
E-commerce tax is the most fragmented part of UK small business compliance. The same product, sold to the same customer, can have completely different VAT treatment depending on whether it went through Shopify, Amazon, Etsy or eBay, and where the stock was held when the order was placed. The issues we see most often:
The £135 marketplace rule
For low-value imports sold through a marketplace, the marketplace charges and accounts for the VAT — not you.
Two separate schemes, both essential for UK sellers shipping to EU consumers.
Since 1 July 2021, UK sellers selling B2C into the EU have two main routes: the Import One-Stop Shop (IOSS) for goods up to €150 shipped from the UK direct to EU consumers, and the One Stop Shop (OSS) for stock already held inside the EU (e.g. through Amazon FBA in Germany).
Note: the IOSS regime is being phased out as part of the EU’s VAT in the Digital Age (ViDA) reforms. From around 2027-2028, the €150 low-value import threshold is set to be removed, with VAT and customs handled differently at checkout for all import consignments. The exact rules are still being finalised — we will guide clients through the transition when it lands.
Marketplace fees, refunds and reserves
Your gross sales figure is not your revenue — and most accounting software cannot tell the difference.
A £30 Amazon order is rarely £30 of revenue. Strip out the referral fee, FBA fulfilment fee, advertising costs, postage refunds, lost-stock reimbursements, customer returns, prepaid VAT, and the actual figure that hits your bank statement is often 60-70% of the gross. The same applies to Shopify (payment processing fees, app subscriptions, chargebacks), Etsy (transaction fees, offsite ads), and eBay (final value fees, promoted listings). Getting each line into the right place in Xero — revenue, fees, refunds, VAT — is what makes the management accounts useful. We do this with structured monthly journals from each platform, not by dumping a payout figure into “sales”.
Multi-channel stock accounting
Stock value at year-end is rarely what the dashboard says it is.
Sellers across Shopify, Amazon FBA, Etsy, eBay and high street typically hold stock in three or four locations at any one time — and HMRC expects an accurate stock figure at year-end to calculate cost of sales. FBA can include stock in fulfilment centres across the UK and EU. Returned items may sit in a third-party warehouse waiting for inspection. Damaged stock may have been written off in one system but not another. We reconcile stock at year-end against actual counts and platform inventory, valued at the lower of cost or net realisable value.
Postponed VAT accounting on imports
UK VAT-registered sellers do not have to pay import VAT upfront at the border.
For imports valued over £135, import VAT applies. UK VAT-registered businesses can use Postponed VAT Accounting (PVA) to declare and reclaim the import VAT on the same VAT return, instead of paying upfront at the border. This is a major cash flow win for sellers importing high-value stock. We set up PVA on your customs declarations and reconcile the monthly statements against your VAT returns.
Cost of goods sold and gross margin
Profit on each SKU is the metric that matters — and most sellers have never seen it.
Most e-commerce accounting buries cost of goods sold in a single line on the profit and loss. That is enough for HMRC, but useless for decisions. We track landed cost (product cost + import duty + freight + handling) per SKU or product family, so gross margin is visible per product, per channel, per month. The seller stops guessing which products are profitable and starts seeing it.
Income tax for sole-trader sellers
Income tax for sole-trader sellers — If you are running an e-commerce business as a sole trader, MTD for Income Tax now applies if your qualifying income is above the current threshold. Sole-trader sellers with gross self-employment income above the threshold fall into Making Tax Digital for Income Tax, with the threshold being phased down over time. We get sole-trader sellers on Xero and ready for quarterly submissions before the deadline.”
What can an e-commerce seller claim as an allowable expense?
Allowable expenses for an e-commerce business cover most operating costs, provided they are wholly and exclusively for the trade. Common claims include:
Cost of goods and inventory:
- Cost of products purchased for resale
- Import duty, freight and shipping into the UK
- Customs broker fees
- Packaging, labels, bubble wrap, boxes, tape
Platform and software costs:
- Shopify subscription, Amazon Professional Seller fee, Etsy/eBay listing and final value fees
- Payment processing fees (Stripe, PayPal, Klarna, Clearpay)
- App subscriptions and Shopify plugins
- A2X, Linnworks, or similar reconciliation tools (note: at NDCA, Xero with Apron is our standard stack)
- Email marketing platforms (Mailchimp, Klaviyo)
- Design and image tools (Canva, Adobe)
Marketing and advertising:
- Facebook, Instagram, TikTok and Google Ads
- Amazon PPC and sponsored listings
- Influencer payments and affiliate commissions
- Product photography and content production
- SEO and content writing
Fulfilment and logistics:
- Amazon FBA fulfilment and storage fees
- 3PL warehouse fees
- Couriers and postage (Royal Mail, Evri, DPD, ParcelForce)
- Returns processing fees
- Storage and warehousing rent
Professional and admin costs:
- Accountancy and bookkeeping fees
- Public liability and stock insurance
- Legal fees for trademarks or platform disputes
- Bank charges and foreign exchange costs
- Mobile phone and internet (business proportion)
- Use of home as office (HMRC simplified rate £10–£26 per month depending on hours)
Capital purchases:
- Annual Investment Allowance — 100% deduction on qualifying plant and equipment up to £1,000,000 per year
- Photography equipment, computers, label printers, packing equipment
Not allowable: stock that has not yet been sold (held as inventory on the balance sheet until sold), personal-use portion of any expense, and entertainment of UK customers.
Who we work with
NDCA e-commerce and retail clients fall into a few groups:
- Shopify and WooCommerce stores selling direct to consumers
- Amazon FBA and FBM sellers, including multi-marketplace traders
- Etsy and eBay sellers scaling beyond hobby level
- Multi-channel sellers running across two or more platforms
- High-street and bricks-and-mortar retailers with EPOS systems
- Hybrid retailers running in-store and online together
- Print-on-demand and dropshipping businesses
- D2C brands launching through Shopify with paid acquisition
- Subscription-box businesses and recurring-revenue retailers
If your situation is not on the list, send us a message — it almost certainly fits.
How NDCA works
Three things make our service different for e-commerce specifically.
- Fixed monthly fee
You pay one price every month for everything we agreed at the start — bookkeeping, multi-channel reconciliation, VAT, payroll, year-end. No clock-watching, no surprise invoice when an extra sales channel goes live. - A real human, fast
You get a named accountant who understands the platforms you sell on, not a ticket queue. Most questions get a reply within one working day. - Built around the way platforms actually pay out
Marketplaces and payment processors do not pay in clean monthly cycles. They pay every 2 weeks, every 14 days, every 7 days — sometimes with a 7-day reserve, sometimes net of a return. We reconcile to the actual payout cycle, not the calendar month, so the figures match the bank statement and the platform settlement reports.
- Fixed monthly fee
You pay one price every month for everything we agreed at the start — bookkeeping, multi-channel reconciliation, VAT, payroll, year-end. No clock-watching, no surprise invoice when an extra sales channel goes live. - A real human, fast
You get a named accountant who understands the platforms you sell on, not a ticket queue. Most questions get a reply within one working day. - Built around the way platforms actually pay out
Marketplaces and payment processors do not pay in clean monthly cycles. They pay every 2 weeks, every 14 days, every 7 days — sometimes with a 7-day reserve, sometimes net of a return. We reconcile to the actual payout cycle, not the calendar month, so the figures match the bank statement and the platform settlement reports.
Xero is the only platform we use
Xero is the only bookkeeping platform we run. For e-commerce, that matters.
Each sales channel feeds into Xero through structured monthly journals — Shopify revenue, Amazon settlements, Etsy payouts, Stripe and PayPal balances all coded correctly to revenue, fees, VAT and refunds. Stock movements track through Xero. VAT is calculated automatically and submitted directly to HMRC under MTD. Bank feeds reconcile against actual deposits. You see the same numbers every month — not whatever the platform dashboard happens to be reporting on the day.
If you are not yet on Xero, we migrate you across as part of onboarding. If you are already there, we plug straight in.
Apron for invoice capture
E-commerce sellers spend more time managing supplier paperwork than most. Stock invoices from overseas suppliers in three different currencies. Freight forwarder invoices. Customs broker bills. 3PL statements. Packaging supplier bills. Software subscriptions on a dozen different cards.
We use Apron to capture all of it. Forward an invoice to your dedicated Apron email address, or snap a photo, and the supplier, date, amount, VAT and line items are pulled out automatically and pushed into Xero — coded to the right cost line and matched to the bank transaction. By the time year-end arrives, every cost is documented and every allowable expense is claimed.
VAT on multi-channel sales doing your head in?
Shopify, Amazon, Etsy, eBay, and physical stock — each treated differently for VAT. Send us your platform mix — we'll come back within one working day with a fixed monthly quote.
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Switching from another accountant
If you already have an accountant and the bookkeeping cannot keep up with your sales channels, switching is simpler than people think. We send your current accountant a professional clearance letter, collect your records, and pick up where they left off. Most e-commerce clients are fully on-boarded within two weeks.
You do not need to wait for year-end. You do not need an awkward phone call. We handle it.
E-commerce accounting FAQs
If you are a UK-based seller, yes — once your taxable turnover exceeds £90,000 in any rolling 12-month period. If you are an overseas seller making direct sales to UK customers (not exclusively through a marketplace), you must register from your first qualifying transaction with no minimum threshold. If all your UK sales are through a marketplace that operates the £135 rule, the marketplace handles UK VAT and you may not need to register.
For overseas-stock consignments worth £135 or less sold to UK consumers through an online marketplace, the marketplace (Amazon, eBay, Etsy) charges UK VAT at checkout and accounts for it to HMRC. The seller's supply to the marketplace is zero-rated. For consignments over £135, normal import VAT and customs rules apply.
OSS (One Stop Shop) is for B2C sales of goods stored inside the EU and sold to consumers in other EU member states — one quarterly return covering all of them. IOSS (Import One Stop Shop) is for goods worth €150 or less shipped from outside the EU (including the UK) direct to EU consumers. IOSS lets you charge EU VAT at checkout so customers do not pay it at delivery. Most UK sellers use one, the other, both, or neither depending on their fulfilment model.
No. Shopify provides VAT calculation tools that apply the correct rate at checkout based on the customer's location, but it does not file VAT returns or remit VAT to HMRC. That is the seller's responsibility. Amazon, eBay and Etsy do remit VAT on certain transactions under marketplace facilitator rules.
Yes, if you are UK VAT-registered. Under Postponed VAT Accounting (PVA), import VAT on goods worth more than £135 is declared and reclaimed on the same VAT return, rather than paid upfront at the border. This is a significant cash flow advantage and most importers should be using it.
For most e-commerce sellers, no. The Flat Rate Scheme is rarely beneficial for businesses with significant reclaimable input VAT on stock, advertising and software costs. We model it against the standard scheme before recommending one.
Sole-trader sellers with gross self-employment income over £50,000 are in scope of Making Tax Digital for Income Tax from 6 April 2026. The threshold drops to £30,000 in 2027 and £20,000 in 2028. Gross income, not profit, is what counts. Limited company sellers are not affected — MTD for Income Tax applies only to individuals.
Stock is valued at the lower of cost (what you paid, plus import duty, freight and handling) or net realisable value (what you could sell it for, less remaining costs). For multi-channel sellers, this means counting stock across Amazon FBA, 3PL, home storage and any retail premises. We reconcile against platform inventory and physical counts at year-end.
If you run the business from home, yes. HMRC simplified expenses give a flat rate of £10–£26 per month depending on hours worked from home, or you can claim the business-use proportion of actual costs (utilities, rent, council tax, internet). For most sellers the simplified rate is easier and gives a fair claim.
Xero, exclusively. We are a certified Xero Partner. We pair Xero with Apron for supplier invoice capture, and use structured monthly journals from each sales platform (Shopify, Amazon, Etsy, eBay, Stripe, PayPal) to feed the revenue side cleanly. A2X is widely used in the sector but not required — our approach handles the reconciliation natively in Xero.
Yes. NDCA is regulated by the ACCA (Association of Chartered Certified Accountants).
We are remote first. We work with e-commerce sellers across the UK using Xero, so location does not matter.
Yes. Book one on 01903 968618 or via the contact form.
Ready to hand over the platform reconciliations?
Most e-commerce clients hand us platform statements once a fortnight and never think about VAT or year-end again. Send us a few details — we'll come back within one working day with a fixed monthly quote.
