If you sell on eBay, Etsy or TikTok Shop, you've probably had an email asking for your National Insurance number or company number. That's the platform getting ready to report you to HMRC. So the obvious question for anyone running a store on Shopify is: does Shopify do the same thing?
The short answer is no, and the reason matters. Shopify sits in a different legal box from a marketplace, and that changes who reports what, who collects the VAT, and where the responsibility lands when HMRC comes asking.
This guide explains exactly why Shopify is treated differently from eBay, Etsy and TikTok Shop, what each one does and doesn't report, and what you need to do yourself when you sell through your own Shopify store. It's written for UK-based sellers, and every rule below is linked to the relevant HMRC guidance.
Does Shopify report your sales to HMRC?
No. Shopify does not file an annual seller report to HMRC under the digital platform reporting rules, because Shopify is a store-builder and checkout, not an online marketplace that connects you to buyers.
That doesn't mean your Shopify sales are invisible to HMRC, and it certainly doesn't mean they're untaxed. It means the duty to declare your income and account for VAT sits squarely with you, not with a platform reporting on your behalf. We'll unpack what that involves further down.
What are the digital platform reporting rules?
From 1 January 2024 the UK adopted the OECD's model reporting rules for digital platforms (often shortened to the digital platform reporting rules, or MRDP). Under these rules, certain online platforms must collect and verify information about their sellers and send an annual report to HMRC.
The first reports covered the 2024 calendar year and were due by 31 January 2025. The pattern repeats every year: a platform collects seller data for a calendar year and reports it by the following 31 January. HMRC's guidance for sellers confirms platforms collect details such as your name, address, date of birth and tax identifier, alongside the income they paid you, and must give you a copy of what they report (see Selling goods or services on a digital platform).
There's a small-seller exclusion for goods. A platform does not have to report you for selling goods if, in the calendar year, you make fewer than 30 sales and receive 2,000 euros or less (roughly £1,700) for them. Both conditions have to be met. Cross either threshold and you're reportable.
One point HMRC is firm on, and we'll repeat it because it causes real anxiety: being reported does not automatically mean you owe tax. The report is data, not a tax bill. Whether tax is due depends on your actual profit and your circumstances.
Which activities are caught?
The rules cover "relevant activities": selling goods, providing personal services, renting out property, and renting out transport. So a marketplace selling secondhand clothing, a food-delivery app, and a short-let booking site can all be in scope. The trigger is the platform's role in connecting sellers to buyers, not the product itself.
Why is Shopify not a reporting platform like eBay or Etsy?
Because of how HMRC defines a platform. Under the registration guidance for digital platform operators, a digital platform must do two things: connect sellers to customers to supply goods or services, and either hold or be able to easily work out the amount paid to those sellers.
The same guidance then lists what is not a platform. Crucially, it excludes:
- software that only processes payments
- a website or app that only allows users to list or advertise products to sell
- a website or app that only redirects or transfers users to another website
- software that only helps design and maintain websites
Shopify lives in that excluded space. It gives you the software to build and run your own shop and to take payments at your own checkout. It doesn't operate a shared marketplace where buyers browse many sellers' listings and Shopify connects you to them. You bring your own customers, you own the storefront, and the customer is buying from you, not from "Shopify". That's the whole difference.
Put simply, eBay is a marketplace you sell on. Shopify is software you sell with. The first is a reporting platform; the second is not.
Do eBay, Etsy and TikTok Shop report to HMRC?
In practice, yes. eBay, Etsy and TikTok Shop are online marketplaces that connect sellers to a shared pool of buyers and handle the money, which puts them squarely inside the definition of a reportable platform. That's why these sites have been emailing sellers to collect tax identifiers, and it's why HMRC's own seller guidance uses marketplaces of this kind as its examples.
If you sell through any of them above the small-seller goods threshold (30 sales and 2,000 euros), expect your details and the income they paid you to be included in their annual report to HMRC. You should also receive your own copy of that information, which is genuinely useful for checking it against your own records.
There's a separate point worth flagging for TikTok Shop, eBay and Etsy: for some sales they also act as the VAT collector, which Shopify does not. We cover that next.
How does this compare across the platforms?
Here's the practical picture for a UK seller. "Reporting platform" means it sends an annual seller report to HMRC under the digital platform reporting rules. "Deemed supplier for VAT" means the platform, not you, accounts for the UK VAT on certain sales.
| Platform | Type | Reports sellers to HMRC (MRDP) | Can be VAT-deemed supplier |
|---|---|---|---|
| Shopify | Store builder and checkout | No | No |
| eBay | Online marketplace | Yes | Yes, on certain sales |
| Etsy | Online marketplace | Yes | Yes, on certain sales |
| TikTok Shop | Online marketplace | Yes | Yes, on certain sales |
The marketplaces are deemed the supplier for UK VAT in two specific situations set out in HMRC's guidance on VAT and overseas goods sold using online marketplaces: goods sent from outside the UK to a UK consumer in a consignment worth £135 or less, and goods already in the UK at the point of sale that are sold by an overseas seller. On a normal sale of UK-located stock by a UK-established seller, you still account for your own VAT even on a marketplace.
Who handles the VAT on Shopify versus a marketplace?
This is where the contrast bites, because VAT is where sellers most often get caught out.
On a marketplace, HMRC's rules can make the platform the "deemed supplier". The same overseas-goods guidance defines an online marketplace as a business that, in any way, sets the terms of supply, is involved in authorising the customer's payment, and is involved in ordering or delivery. Where that applies to the two situations above, the marketplace charges and pays the UK VAT, and you're treated as making a zero-rated supply to it.
Shopify is not an online marketplace under that definition, and it is not a deemed supplier. The same guidance excludes a business that only processes payments, only lists or advertises goods, or only redirects customers elsewhere. Shopify's checkout can calculate and add VAT for you, but it does not collect and remit that VAT to HMRC on your behalf. That job is yours.
So on Shopify, you are responsible for the whole VAT chain: deciding whether you must register, charging the right rate, filing the returns, and paying HMRC.
Illustrative example: when does a Shopify seller register for VAT?
Illustrative example. Sara runs a UK-based candle business entirely through her own Shopify store. Over the 12 months to 30 April 2026 her taxable sales reach £92,000.
The UK VAT registration threshold is £90,000 of taxable turnover (the threshold in force from 1 April 2024, per VAT registration thresholds). Because Sara crossed it, she must register for VAT. No marketplace did this for her and no platform flagged it, because Shopify isn't a deemed supplier. The onus was entirely hers.
Once registered, on a £30 candle sold to a UK consumer she charges the 20% standard rate (VAT rates). The price breaks down as £25 net plus £5 VAT, and that £5 is hers to declare and pay to HMRC on her VAT return. Compare that with the same £30 candle sold via a marketplace where the platform happens to be the deemed supplier: there, the platform would handle that VAT instead.
A quick sense-check on the maths: £25 x 20% = £5, and £25 + £5 = £30. Correct.
A note on the VAT Flat Rate Scheme
Some smaller sellers use the VAT Flat Rate Scheme to simplify their returns. You can join if your VAT-taxable turnover is £150,000 or less, excluding VAT, in the next 12 months.
Be careful with the "limited cost business" trap, though. If your goods cost less than 2% of your turnover, or less than £1,000 a year, you pay a flat rate of 16.5% on your gross takings (how much you pay on the Flat Rate Scheme). For many low-cost product or service sellers that rate makes the scheme worse than standard VAT accounting, so do the comparison before you opt in. This is exactly the kind of decision our ecommerce accounting team helps sellers run the numbers on.
What do you need to do as a Shopify seller?
Because no platform reports for you and no platform collects your VAT, the compliance basics are on you. In practice that means:
- Declare your income. Profits from your Shopify store are taxable through Self Assessment if you trade as a sole trader, or through Corporation Tax if you trade through a limited company. Selling through your own site rather than a marketplace changes nothing about that.
- Watch the £90,000 VAT line. Track your rolling 12-month taxable turnover, not just your tax-year figure, and register when you cross £90,000 (VAT registration thresholds).
- Keep digital records. Once VAT-registered you must follow Making Tax Digital for VAT, keeping records digitally and filing through compatible software (see HMRC's Making Tax Digital for VAT collection). Shopify's reports are a starting point, not a substitute for proper bookkeeping.
- Mind cross-border rules. If you import stock, or sell to or from outside the UK, the £135 consignment rules and reverse charge can apply. HMRC's overseas-goods guidance is the place to start.
The reassuring part is that "Shopify doesn't report" is not a loophole and not a worry. It just means the responsibility is structured normally, the way it is for any business selling direct. Get your bookkeeping and VAT right and there's nothing to fear from a marketplace report you were never part of.
Want this off your plate? Our specialists work with online sellers every day. Book a free 20-minute call with a Zmartly accountant through our support for Shopify sellers, and we'll map your exact VAT and reporting position before your next deadline.
Frequently asked questions
Does Shopify report my sales to HMRC?
No. Shopify is a store builder and checkout, not an online marketplace, so it does not file the annual seller report that the digital platform reporting rules require of platforms like eBay and Etsy. Your income is still taxable, and you declare it yourself through Self Assessment or Corporation Tax.
Does eBay report to HMRC?
Yes. As an online marketplace, eBay is within the digital platform reporting rules and reports seller details and income to HMRC each year, unless you fall under the small-seller exclusion for goods (fewer than 30 sales and 2,000 euros or less in the calendar year).
Does Etsy report to HMRC?
Yes. Etsy is an online marketplace and reports qualifying sellers to HMRC annually under the same rules, subject to the same small-seller goods exclusion of fewer than 30 sales and 2,000 euros or less.
Does TikTok Shop report to HMRC?
Yes. TikTok Shop operates as an online marketplace, so it reports qualifying sellers to HMRC each year and can also act as the deemed supplier for VAT on certain sales, such as low-value imports.
Does Shopify collect VAT for me?
No. Shopify can calculate and add VAT at checkout, but it does not act as a deemed supplier and does not remit VAT to HMRC for you. Registering, charging the correct rate, filing returns and paying HMRC are all your responsibility.
Do I need to register for VAT if I sell on Shopify?
You must register once your taxable turnover passes the £90,000 threshold over any rolling 12-month period, and in some cross-border situations sooner. No platform does this for you when you sell through your own Shopify store.
Will HMRC know about my Shopify income if it isn't reported?
You are legally required to declare it regardless of whether a platform reports it. HMRC also has wide information powers and data sources, so non-reporting by Shopify is not a reason to leave income off your return.
