If you sell on Amazon FBA, there is a set of VAT transactions hiding inside your reports that you have probably never put on a VAT return. They are called commingling transactions, and they appear because Amazon sometimes ships another seller's identical unit to your customer, and one of your units to someone else's.
That swap is not just a logistics detail. For VAT, swapping ownership of goods between two businesses is a supply, so each swap creates two VAT lines: one where you sell a unit and one where you buy one. Most sellers never see them, because they sit in a separate report and the net cash effect is nil.
This guide explains what commingling is, exactly which VAT transactions it creates, why they are usually VAT-neutral but still need reporting, and what is changing now that Amazon is retiring the programme. Every rule is grounded in HMRC guidance, with sources at the end.
A note up front: the UK VAT treatment of commingling is not spelled out in a single dedicated HMRC notice. It follows from the general "supply of goods" rules, and the exact mechanics depend on your stock locations. Where that matters, we flag it, and this is a topic worth confirming with your accountant for your specific setup.
What is Amazon commingling? {#what-is-commingling}
Commingling is when Amazon stores identical products from different sellers together in the same bin, instead of keeping each seller's units physically separate. It is also called stickerless or stickerless commingled inventory, because the units carry only the manufacturer barcode rather than an Amazon FNSKU label unique to you.
The point is speed. When a customer orders, Amazon ships the nearest matching unit, even if that exact unit was sent in by a different seller. To make that work without anyone losing out, Amazon treats the swapped units as changing hands between the sellers involved (and sometimes Amazon Retail).
So in practice you might send 100 units into a fulfilment centre, and over a month Amazon might fulfil some of your orders using other sellers' identical units, and use some of yours to fulfil theirs. The customer never notices. Your VAT records, though, should.
Why does commingling create VAT transactions? {#why-vat-transactions}
Because for VAT, a supply of goods means passing the exclusive ownership of moveable items to another person. That is HMRC's own definition in the main VAT guide (VAT Notice 700, section 4), and a swap of stock between two businesses meets it on both sides (VAT guide (VAT Notice 700) - gov.uk).
When Amazon uses your unit to fulfil another seller's order, ownership of that unit passes from you to that other party. That is a supply you make, so it carries output tax. When Amazon uses someone else's unit to fulfil your order, ownership passes to you, which is a purchase carrying input tax you can reclaim.
For a fully taxable, VAT-registered seller the two sides cancel out, the same way the old Amazon fee reverse charge used to. You account for output tax on what you supplied and reclaim the same input tax on what you received. The net VAT is nil, which is exactly why these transactions are so easy to overlook.
But "nil net effect" is not the same as "nothing to report". The default position is that taxable supplies you make go on your VAT return, even when a matching reclaim washes them out. Leaving them off entirely understates both your sales (Box 6) and purchases (Box 7) figures, even where the VAT in Boxes 1 and 4 still nets to zero.
What are Commingling Buy and Commingling Sell? {#buy-and-sell}
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Amazon reports the two sides under two transaction types. The exact labels can vary slightly across Amazon's reports, but the two events are consistent.
- Commingling Sell (sometimes shown as Commingling_Sell). This is the supply you make when one of your units is used to fulfil another seller's order, or is transferred to Amazon Retail. You are the seller, so this carries output tax.
- Commingling Buy (Commingling_Buy). This is the purchase you make when another party's identical unit is used to fulfil your order. You are the buyer, so this carries input tax you can reclaim if you are VAT registered and using the goods for taxable sales.
Here is the key thing sellers miss: these are separate from the VAT on your normal customer sales and separate from the VAT Amazon charges on its fees. They are a third layer, recorded only in Amazon's commingling or VAT transactions report, not in your day-to-day order data.
Because each swap pairs a buy with a sell of identical goods at the same value, the figures tend to mirror each other closely over a period. They are still distinct taxable transactions, not a single net entry, and HMRC expects taxable supplies to be recorded in your VAT account.
Worked example: a month of commingling transactions {#worked-example}
Illustrative example. Daniel runs a homeware brand on Amazon FBA. He is VAT registered in the UK on standard accounting, and his stock is held in UK fulfilment centres. In one month, his Amazon commingling report shows the following swaps of identical units, all UK to UK.
| Transaction type | Net value | VAT at 20% | Direction |
|---|---|---|---|
| Commingling Sell | £1,500.00 | £300.00 | Output tax (you supply) |
| Commingling Buy | £1,480.00 | £296.00 | Input tax (you receive) |
| Net VAT effect | £4.00 | Output minus input |
The arithmetic: on his supplies, output tax is £1,500 x 20% = £300. On his purchases, input tax is £1,480 x 20% = £296. The net VAT is £300 minus £296 = £4 for the month, a rounding-level figure that reflects the small imbalance between units swapped out and in.
On his VAT return, Daniel includes the £300 output tax in Box 1 and the £296 input tax in Box 4, with the net values in Box 6 (sales) and Box 7 (purchases). The cash impact is tiny, but the supplies are now correctly on record rather than missing.
Now picture the same data if Daniel never looks at the commingling report. His Box 1 and Box 4 still net out, so his VAT bill is unchanged, but his declared sales and purchases are both understated. That mismatch is the kind of thing that does not cause a problem until someone reconciles his Amazon data against his return.
Where do I find the commingling VAT report? {#where-to-find}
Commingling transactions do not appear in your normal sales reports. They live in Amazon's tax and VAT reporting, separate from your order-level data.
In Seller Central, look in the VAT and tax reporting area (commonly the VAT Transactions Report, and for some sellers a dedicated commingling document) under Reports, then the Tax Document Library. The lines are tagged as commingling sale or commingling purchase, usually with a fulfilment centre identifier attached.
Two practical points sellers run into:
- The data is raw. The reports list every transaction line by line, with no friendly summary. You, or your software, have to filter out the commingling entries and total the buy and sell sides for the period.
- Bookkeeping software does not always pick them up automatically. If your integration only pulls order and settlement data, commingling lines can be missed entirely. It is worth checking that whatever feeds your VAT return actually captures them.
If you are not sure whether your current bookkeeping captures these transactions, this is exactly the kind of thing we check when we set up VAT for FBA sellers on our Amazon FBA accounting service. Getting the report mapped correctly once saves re-doing returns later.
Does commingling change if my stock is stored abroad? {#stock-abroad}
Yes, and this is where commingling stops being a tidy UK-to-UK rounding issue and becomes a genuine compliance question.
If your goods are stored only in the UK and swapped only with UK stock, the commingling supplies are UK domestic transactions, and the buy/sell pair behaves as in the example above. Straightforward, even if fiddly.
If you use a programme that places your stock in fulfilment centres abroad, the picture is different. Storing your own goods in another country generally creates a requirement to register for VAT in that country, regardless of how much you sell there, because the stock location triggers a local registration obligation. Commingling on top of that adds cross-border supplies between sellers, which interact with each country's VAT rules and any reporting you do under schemes like the EU One Stop Shop.
We are deliberately not stating a single rule for every cross-border case here, because the right answer depends on exactly where your stock sits and which Amazon programmes you use. The safe takeaway is this: if Amazon holds your stock outside the UK, commingling is one of several reasons you should get your multi-country VAT position checked rather than assumed. Our VAT services for UK businesses cover exactly this kind of review for ecommerce sellers.
Amazon is ending commingling in 2026: what changes? {#ending-2026}
Amazon has announced that it is ending its commingling practices, with the change taking effect on 31 March 2026. This is a recent, Amazon-side policy change rather than a tax-law change, so confirm the current detail in your own Seller Central account, as timing and eligibility can move.
Based on Amazon's published guidance, the headline is that units will be matched to the specific seller who sent them in, rather than swapped with identical units from other sellers. Brand owners with the relevant Brand Registry role will be able to keep using manufacturer barcodes without commingling, while some resellers will need to apply Amazon (FNSKU) barcode labels to their stock so each unit stays tied to them.
What does that mean for VAT? Once your inventory is no longer commingled, the swap-driven Commingling Buy and Commingling Sell transactions should stop being generated for that stock. The cross-border storage question does not go away, because that is driven by where Amazon holds your goods, not by commingling.
Two things still matter even as the programme winds down. First, any commingling that happened up to the cut-over date is still on your records for those VAT periods and should be reported correctly. Second, do not assume the report is empty just because the programme is ending, check it for each period until you are confident there is nothing in it. If you want a second pair of eyes on the transition, that is part of what we do on our Amazon FBA accounting service.
Frequently asked questions {#faqs}
What is commingling VAT on Amazon?
Commingling VAT is the VAT on transactions created when Amazon swaps your FBA stock with identical units from other sellers. Each swap is a supply of goods for VAT, so it generates a Commingling Sell (a supply you make, carrying output tax) and a Commingling Buy (a purchase you receive, carrying input tax). For a fully taxable VAT-registered seller the two usually cancel out, but they still need reporting.
Do I have to report commingling transactions if the VAT nets to zero?
Yes. The fact that output tax and input tax cancel out does not remove the supplies from your VAT account. Leaving them off understates your sales and purchases figures (Boxes 6 and 7) even when the net VAT in Boxes 1 and 4 is nil. The correct treatment is to include both sides.
Where do I find Amazon commingling transactions?
In Amazon Seller Central, under Reports then the Tax Document Library, in the VAT and tax reporting area. They appear as commingling sale and commingling purchase lines in the VAT Transactions Report, separate from your normal order and settlement data, which is why they are easy to miss.
Is commingling VAT the same as the VAT on Amazon seller fees?
No. VAT on Amazon seller fees is the 20% Amazon charges you on its referral, FBA and subscription fees since 1 August 2024. Commingling VAT is on swaps of physical stock between sellers. They are separate transaction types and sit in different reports, so treat them separately on your return.
What happens to commingling VAT when Amazon ends the programme in 2026?
Amazon has said it is ending commingling on 31 March 2026, so once your stock is matched only to you, new commingling swaps should stop. Transactions from before the cut-over still need reporting for those periods. The change is Amazon policy, not tax law, so check the current position in your own Seller Central account.
Does commingling create VAT problems if my stock is stored abroad?
It can. Storing your goods in another country generally triggers a VAT registration requirement there, regardless of sales volume, and commingling adds cross-border supplies on top. The right treatment depends on your exact stock locations and Amazon programmes, so a multi-country VAT review is sensible rather than assuming UK rules apply.
Get your commingling VAT reported correctly
Commingling transactions are small in cash terms but easy to leave off a return entirely, and if your stock touches more than one country they can point to a registration obligation you did not know you had. If you sell through Amazon FBA and want your commingling, fee VAT and cross-border position checked and filed correctly, talk to us. Book a call with a Zmartly accountant through our Amazon FBA accounting service, and we will make sure nothing in your Amazon reports is quietly going unreported.
