Using Linnworks with the VAT Margin Scheme: What You Need to Know

Linnworks Is Great for Inventory — But Not for Margin VAT

Linnworks is one of the UK's most popular inventory and order management platforms for multi-channel ecommerce sellers. It connects to eBay, Amazon, Shopify, and many other channels, giving dealers a single view of their stock and orders. For order processing, stock syncing, and fulfilment, it's excellent.

But Linnworks is an inventory and operations tool — it is not a VAT accounting tool. And it has no support whatsoever for the VAT Margin Scheme. If you're a second-hand dealer using Linnworks, you need a separate system to handle your margin scheme bookkeeping.

What Linnworks Does for Multi-Channel Dealers

Linnworks provides:

• Centralised order management across eBay, Amazon, Shopify, WooCommerce, and others
• Inventory syncing — when something sells on one channel, stock is updated across all
• Purchase order management and supplier tracking
• Stock location tracking (useful for FBA + warehouse combinations)
• Shipping integrations with Royal Mail, DPD, and others
• Basic reporting on sales and inventory

For high-volume multi-channel dealers, these capabilities are genuinely valuable. Linnworks saves significant time on order processing and prevents overselling.

What Linnworks Doesn't Do

Linnworks does not:

• Track the purchase price of individual second-hand items for margin VAT purposes
• Calculate VAT on profit margins
• Maintain an HMRC-compliant stock book
• Distinguish between margin scheme eligible and non-eligible goods
• Feed margin VAT figures to accounting software correctly

Linnworks does have cost-of-goods tracking (COGS), which is useful for business reporting. But COGS as tracked in Linnworks is not designed to meet HMRC's VAT Margin Scheme stock book requirements — it's a business performance metric, not a VAT compliance record.

The Linnworks + Margin Scheme Gap

The gap creates a problem for dealers who rely on Linnworks as their operational hub. They have excellent visibility of orders and inventory, but their margin scheme bookkeeping is still being done manually — usually in a separate spreadsheet that imports data from Linnworks exports.

This manual step introduces errors and takes time. Common issues:

• Forgetting to update the spreadsheet when Linnworks records a sale
• Using the wrong purchase price for an item (especially when stock was bought in batches)
• Failing to update records for returns and cancellations
• Not capturing all channels — Linnworks might not connect to every sales channel

How AutoVAT Integrates with Linnworks

AutoVAT can connect to Linnworks to pull order and inventory data, then apply margin scheme calculations automatically. The integration uses Linnworks' API or data exports to:

• Import completed orders across all channels
• Match sales to purchase records maintained in AutoVAT
• Calculate margin VAT for each eligible transaction
• Generate the HMRC-compliant stock book entries
• Feed summary figures to your accounting software

The result: your Linnworks setup handles what it's good at (operations), and AutoVAT handles what it can't (margin VAT bookkeeping). Neither system tries to do what the other is better suited for.

Linnworks + Xero/QuickBooks + AutoVAT: The Full Stack

For a comprehensive multi-channel dealer setup, the typical automated stack looks like:

• Linnworks: Order management, inventory, fulfilment
• AutoVAT: Margin VAT calculation, stock book, HMRC compliance
• Xero or QuickBooks: Final accounting, bank reconciliation, VAT returns, P&L

AutoVAT sits in the middle of this stack, taking operational data from Linnworks and pushing correct accounting entries to Xero or QuickBooks. Each tool does what it's designed for.

Other Inventory Tools

The same principles apply to other inventory management tools popular with UK dealers:

• Brightpearl: Operations and ERP features, but no margin scheme VAT
• Veeqo: Multi-channel inventory and shipping, same gap
• Sage 200/50: Strong accounting, but margin scheme requires additional configuration
• Cin7: Inventory management with some accounting features, but not margin-scheme-aware

If you're using any of these tools and dealing in second-hand goods, the margin scheme bookkeeping gap likely exists in your setup. AutoVAT can be configured to integrate with most inventory and order management platforms.

Getting Your Linnworks + AutoVAT Setup Right

Every Linnworks user's setup is different — different channels, different product categories, different accounting software. AutoVAT is custom-built for each dealer rather than being a generic plugin. We'll review your current Linnworks configuration and design an integration that fits your workflow without disrupting your existing operations.

Request your free AutoVAT + Linnworks consultation →