Selling through Deliveroo, Just Eat, Uber Eats and Amazon can make reaching customers easier, but the VAT position behind those sales is not always as straightforward as the money arriving in your bank account.
Platform commissions, refunds, discounts, delivery charges and timing differences can all affect the figures. HMRC may identify a discrepancy, but that does not mean its interpretation of the figures is automatically correct.
One recent case shows why an assessment should be challenged when the numbers do not stack up.
(Reading Time: Approx. 5 minutes)
Topics Discussed:
- Why online platform receipts can create VAT errors and why gross sales should not be confused with the net amount received.
- How HMRC assessments can contain errors and why reconciliation, review and appeal can dramatically change the final liability.
Why Net Bank Receipts Can Mislead
One of the most common problems with online intermediaries is the difference between gross customer sales and the amount deposited into the business bank account. A customer may pay a platform £100, but the business does not necessarily receive £100. The platform may deduct commission, service charges, advertising costs or other fees before transferring the balance.
If the business records only the bank receipt as turnover, its records may understate the gross sale. For VAT purposes, the gross customer sale, the platform deductions and any VAT on eligible charges need to be identified and dealt with correctly.
This is where problems begin. A bookkeeping system may show one figure, the bank another and the platform statement something else. Without a proper reconciliation, an explainable difference can look like undeclared turnover.
The VAT Errors We Commonly See
Businesses using online platforms can make several VAT mistakes, particularly where there are large volumes of transactions. A business might record only the net amount received after commission rather than the full customer sale. It might also fail to claim VAT on eligible commission, service charges or advertising fees where that VAT is recoverable.
Food businesses face further complications. Hot food, cold food, soft drinks, meal deals, catering supplies and delivery charges may not all have the same VAT treatment. Refunds, cancellations, chargebacks, promotional discounts and timing differences can complicate the figures further.
There is also the risk of recording sales in the wrong VAT period or counting the same sale twice. For Amazon and international sellers, questions can also arise around UK and overseas sales and when an online marketplace is responsible for accounting for VAT. The key point is that a platform statement is not simply a bank statement. The individual parts need to be understood before the VAT return can be checked properly.
HMRC Is Comparing Platform Data
HMRC can compare online platform information with VAT returns, annual accounts, bookkeeping records and bank receipts. A discrepancy can therefore attract attention quickly. If platform data shows gross sales higher than the bank receipts, HMRC may question why. If Amazon data does not appear to match the accounts, it may open an enquiry or raise an assessment.
Businesses should not ignore differences. They need to be explained and supported by records. However, a difference does not automatically prove VAT has been underdeclared. Platform commissions, refunds, discounts, cancelled orders, chargebacks and timing issues may explain the gap. A clear reconciliation allows the business to show how gross sales became the net amount paid over by the platform.
HMRC Can Get Its Own Calculations Wrong
HMRC having access to platform data does not mean every assessment will be correct.
An officer may treat platform sales as additional turnover even though those sales are already included in the accounts. Sales can be double counted. Gross platform figures may be used without properly accounting for corresponding commission costs or VAT on eligible charges.
HMRC may also overlook refunds, discounts, cancelled orders and chargebacks, place sales in the wrong VAT period or apply the wrong VAT treatment to particular transactions.
The penalty position can also be affected. An innocent bookkeeping mistake may be treated as careless or deliberate behaviour, which can substantially increase the amount demanded. An HMRC assessment is a calculation. It is not automatically the final answer.
How a £165,410 Demand Became £22,496.90
A recent case another tax advisor engaged in demonstrates the difference that a proper challenge can make. HMRC assessed a case with a takeaway for £97,300 in VAT and added a 70% deliberate penalty of £68,110. The combined figure was £165,410.
A central issue was platform income. HMRC had uplifted income to reflect gross sales before commission, but the corresponding commission expense and VAT position had not been properly allowed for. The owners of the takeaway engaged with a tax advisor in July 2025. No appeal had been submitted, and the normal deadline had passed, so a late appeal was submitted, as well as a request for a statutory review.
On 31 March 2026, the first statutory review reduced an assessment from £56,272 to £41,014. On 1 April 2026, a separate £41,028 assessment was cancelled entirely.
That left £41,014. An appeal was made to the tribunal on the basis that the remaining assessment was excessive and inaccurate. Following contact from a more experienced HMRC officer, the final assessment was reduced to £22,496.90. What began as £97,300 of VAT plus a £68,110 penalty ultimately became £22,496.90 in total.
What to Do When an Assessment Looks Wrong
Do not assume HMRC must be right simply because it has obtained figures directly from a platform. Platform reports should be reconciled against bank receipts, bookkeeping records, VAT returns and sales records. Gross customer sales should be separated from commission, service charges, refunds, discounts, delivery fees, advertising fees and any VAT on platform charges.
This allows genuine VAT errors to be distinguished from incorrect assumptions made during the enquiry. Where an assessment is excessive, the figures can be challenged. Where a penalty is based on incorrect VAT figures or an inappropriate behaviour category, that should also be reviewed.
Deadlines matter, but a missed appeal deadline does not necessarily mean there are no options. The available review and appeal routes should be considered carefully rather than simply accepting the demand.
Summary
Online platforms can make sales easier, but they can also make VAT records considerably more complicated. The amount reaching the bank may be net of several deductions, while HMRC may be working from gross platform data. Both sides need to be understood before anyone can know whether the VAT calculation is right.
Our view is simple. Your VAT records may contain errors, but HMRC’s assessment can contain errors too. A detailed reconciliation can identify genuine mistakes, expose double-counting and challenge assumptions that have inflated the tax or penalties being demanded.
If you have received a VAT enquiry, assessment or penalty involving Deliveroo, Just Eat, Uber Eats, Amazon or another online platform, get in touch with us here at Tax Expert.
Fill out our form here, email us at info@taxexpert.co.uk, or message us on our WhatsApp for out of office hours.
Kind regards,
Ilyas Patel
