Customer Success Story

How DadyBros reclaimed £8,829 in overpaid VAT from HMRC using Link My Books to correct an Amazon Product Tax Code error

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Marc is a seasoned serial entrepreneur running a large Amazon and eBay business. Across the online marketplaces brings in an average of 41,000 orders per month so for Marc, building processes and automations is super important to help his day-to-day operations.

Marc Dady

Amazon Seller

Introduction

Mixed VAT Rate Products

Marc sells a mixture of standard 20%, reduced rated 5% and zero rated 0% vatable items on Amazon. He uses Seller Tool Kit to add new products to his Amazon account, allocating the correct Product Tax Code (PTC) to new items to ensure they have the correct tax rates applied in his Amazon inventory.

Marc Dady, owner of DadyBros explains:

"Running a businesses selling thousands of different products across multiple marketplaces requires you to have solid processes and automations in place to ensure that things run smoothly. However it's equally important to have knowledgeable people around you to help when things go wrong."

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Challenge
challenge

Incorrect Product Tax Codes On Amazon

The problem arose when unbeknown to Marc, Amazon changed the file structure for bulk uploading products meaning his uploads from Seller Tool Kit were not assigning PTCs to each product.

This resulted in Amazon allocating the default PTC “A_Gen_Tax” to all new items he uploaded, meaning they treated them all as standard rated goods and applied 20% tax inclusive pricing rules to them.

When he realised the issue he reached out to Link My Books to help him find a solution as he estimated that this would have cost him in the region of £10,000 in overpaid VAT during a short 2 month period.

Solution
Solution

Resolving Amazon Tax Issues in Record Time

Since Marc uses Link My Books to automate his Amazon bookkeeping and Link My Books automatically detects the PTCs from Amazon to apply the correct tax rates we needed to find a solution to get around this.

Luckily for Mark, Link My Books also has a bulk upload feature so he was able to take his product file from Seller Tool Kit and upload it to Link My Books. We were then able to correctly group all of his products with the right tax rates, rollback all affected settlements from his Xero account and replace them with updated versions.

In total this took around 1 hour and was mostly handled by the Link My Books support team.

Outcome
Outcome

£8,829 VAT Refund

On Marc's next VAT Return he stands to get back £8,829 in overpaid VAT. He was obviously thrilled about this but mostly about how he could now stop panicking about it all being a mess and worrying if there even was a solution.

Marc’s issue is just one of many different reasons we see every day where sellers have ended up overpaying VAT.

"I can always rely on the Link My Books team to be super responsive to queries I have. In this case, it was my team's oversight of a new Amazon upload feed format that caused the issue but even still the guys at Link My Books came to the rescue and helped me quickly rectify the situation. It's not every day that software you use helps you fix an issue and nets you almost £10k in doing so!"

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Conclusion

Lessons Learned: Why Accurate Tax Code Allocation is Crucial

Marc's experience highlights the critical importance of accurate tax code allocation for sellers dealing with a mix of VAT rates on platforms like Amazon. The unforeseen changes in Amazon's file structure led to a significant challenge, with huge potential financial implications.

However, the swift and efficient resolution provided by Link My Books not only salvaged Marc from a potential £10k loss in overpaid VAT but also streamlined the correction process in record time. The £8,829 VAT refund achieved through Link My Books showcases the tangible impact of effective automation and expert support in navigating complex tax scenarios.

Marc's testimonial underscores the reliability and responsiveness of Link My Books, emphasising the invaluable role such software can play in rectifying unforeseen challenges for sellers in the dynamic e-commerce landscape.

Link My Books comes highly recommended

Marc highly recommends Link My Books to fellow businesses in the ecommerce space. He says, "The combination of the product that just works and the support team that back it make it a no-brainer for anyone in the ecommerce space."

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