If you have received an HMRC letter about undeclared Amazon sales, do not ignore it. HMRC now receives information directly from Amazon and other online marketplaces under digital platform reporting rules. The letter does not automatically mean you owe tax, but you should review your sales history and take advice if income has not been declared.
Over the last few years, HMRC has increased its focus on online sellers, side hustles and ecommerce businesses.
Amazon, eBay, Etsy, Shopify, TikTok Shop and other online marketplaces now share certain seller information with tax authorities under international reporting rules.
HMRC uses this information to:
Many sellers receive what is known as an HMRC nudge letter. These letters are intended to encourage taxpayers to review their position and correct any errors before HMRC takes further action.
Official HMRC Guidance
Check if you need to tell HMRC about your income from online platforms →Under digital platform reporting rules, Amazon may provide HMRC with specific seller information. Here is a breakdown:
| Information Shared | Examples |
|---|---|
| Seller Name | Individual or business name |
| Address | Registered address |
| Date of Birth | For individual sellers |
| Tax Identification Details | UTR, NI Number or VAT details where available |
| Marketplace Earnings | Gross sales figures |
| Number of Transactions | Total annual sales transactions |
| Account Details | Seller account information |
HMRC can use this information to compare reported sales against tax returns already submitted.
Official HMRC Guidance
Selling goods or services on a digital platform →No.
Receiving an HMRC online seller letter does not automatically mean you owe tax or have done anything wrong.
Common reasons for receiving a letter include:
Many people sell unwanted household goods, clothes, electronics or furniture online. If you sold personal belongings at a loss, there may be no tax to pay.
HMRC may have received information from Amazon that matches income you have already reported on your Self Assessment tax return.
The UK Trading Allowance allows many individuals to earn up to £1,000 per tax year from trading activities before tax reporting obligations may arise.
If you were operating an Amazon business and have not declared profits, action may be required. Seek professional advice promptly.
HMRC is primarily interested in identifying:
Yes.
HMRC receives information from online marketplaces and uses sophisticated data matching systems.
Amazon sellers should assume that HMRC may have access to:
This does not mean every seller will be investigated, but it does mean accurate record keeping is essential.
In many cases, yes. Whether you sell through Amazon Marketplace, Amazon FBA, Amazon FBM, private label businesses or wholesale accounts, you may need to declare your profits if you are trading.
Sole traders normally report profits through Self Assessment tax returns each year.
Self Assessment ServicesIf you operate through a company, profits are generally reported through Corporation Tax returns.
Limited Company AccountantsSome small-scale activities may fall within the Trading Allowance. Once activity becomes organised and profit-seeking, further obligations may arise.