8 Essential Document Types:
Keeping accurate records isn't just "good practice"; it is a strict legal requirement. With HMRC's new Digital Platform Reporting rules (OECD) fully active, platforms like eBay now automatically share seller income data with HMRC.
This guide details exactly what documents you need to keep to stay compliant, audit-ready, and stress-free.
Even if you are a sole trader, separating your finances is critical. You must retain all business bank account statements.
Why Keep Them?
These act as the "source of truth" for your turnover. HMRC uses them to cross-reference your declared income.
Retention Period
Sole Traders: 5 years after the submission deadline
Limited Companies: 6 years
Expert Tip:
If you use a personal account, you must highlight every single business transaction. This is messy during an audit—open a separate business account to stay safe.
Most eBay businesses use PayPal, Managed Payments (Ayden), or other processors. You cannot rely solely on the "net amount" hitting your bank.
What to Keep:
Monthly statements showing:
The gross sale amount
The fees deducted
The net payout
The Trap:
If you only record the net amount deposited into your bank, you are:
• Under-reporting your turnover (illegal)
• Missing out on claiming fees as an allowable expense (tax inefficient)
You need the detailed transaction reports from eBay, not just the summary dashboard.
Required Data:
Date of sale
Item description
Gross sale price
Shipping charged
Sales tax collected (international)
HMRC Context: Digital Platform Reporting
Under the new Digital Platform Reporting rules (OECD), eBay reports your sales to HMRC. Your records must match theirs.
Every item you sell must have a "paper trail" of where it came from.
For Resellers
Keep every invoice from wholesalers or receipts from charity shops/car boot sales.
Margin Scheme Users
If you sell second-hand goods, you must keep a "stock book" linking the purchase invoice to the specific sale to calculate the margin correctly.
HMRC Internal Manual: VATMARG02200 - Margin Schemes Record Keeping
Official guidance on record keeping for VAT margin schemes
You can only reduce your tax bill if you can prove the expense was "wholly and exclusively" for business.
Packaging
Boxes, bubble wrap, tape
Postage
Royal Mail Click & Drop manifests
Overheads
Internet, electricity, insurance
Digital Tool:
Use software like Xero or QuickBooks to snap photos of receipts immediately. Thermal receipts fade; digital copies do not.
If you employ staff (even family members) to help pack or list items, you must run a compliant payroll.
Documents:
• Payslips
• P60s
• P11 reports
If you took out a business loan, PayPal Working Capital, or bought equipment on finance:
Keep:
• Credit agreement
• Annual interest certificates
Principal ≠ deduction
Interest = deduction
If your turnover exceeds £90,000 (or you registered voluntarily), MTD rules apply.
Making Tax Digital:
Must keep a "digital link" of records. Calculation must flow from your software.
HMRC Guidance: Record keeping for VAT
Notice 700/21
If you use a Retail Scheme (calculating VAT on daily gross takings), you must keep specific daily records of takings.
Sole Trader
5 Years
After the 31 Jan submission deadline
Source: GOV.UK Self-employed records
Limited Company
6 Years
From the end of the financial year
Source: GOV.UK Company records
VAT Records
6 Years
For all VAT-registered businesses
Source: HMRC Manual CH15400
Not sure if you are a business or just clearing out the attic? HMRC uses the "Badges of Trade" to decide.
If you buy items with the intention to sell them for a profit, you are likely trading.
Check the Official Manual:
BIM20205 - Meaning of trade: Badges of Trade
We help eBay sellers stay compliant with HMRC. From setting up proper bookkeeping systems to preparing your annual accounts and tax returns, our expert team has you covered.
Expert eBay accounting • HMRC compliance • Record keeping systems