A TikTok Shop settlement is not a sales total. To explain the difference, match orders, refunds, platform charges and creator commissions to the cash received, then account separately for VAT, stock and costs paid outside the platform.
This guide works through an illustrative month for a supplement brand with approximately £2m annual revenue excluding VAT. All figures are synthetic, not client results or a forecast. The example assumes standard-rated products, full input VAT recovery and Shipped by Seller fulfilment. Your product tax treatment, fee rates and settlement dates may differ.
Here's the Short Version
- Build two reconciliations: sales to bank receipts, and net revenue to channel contribution. VAT recovery is not a TikTok payout.
- Match creator charges by order, creator, agreed rate and commission base. Do not assume every customer refund produces a creator commission refund.
- Use valid VAT invoices alongside settlement records. Registration alone does not make every fee recoverable.
- Reconcile samples to warehouse records, including samples arranged through TikTok and those sent independently.
The Month End, Step by Step
One, collect the records. In Seller Centre, start with Finance > Statements and the order-level details available for the period. Download tax invoices and supporting invoice detail from Finance > Invoices. Keep order and refund exports, creator agreements and the affiliate order or commission detail available in your account. Match by order ID rather than relying on a single report name: interfaces and export fields can change. Add bank statements, advertising invoices and the warehouse's sample dispatch log.
TikTok's tax invoice guide explains invoice downloads and supporting order-level detail. Keep invoices and credit notes with the working file.
Two, bridge sales to cash. Begin with customer payments and refunds including VAT, then identify each settlement deduction and adjustment. Reconcile opening and closing unsettled balances and reserves so sales from one month are not mistaken for cash received in that month. Match each payout to the bank. Do not subtract output VAT from this bridge unless the platform actually withheld it; VAT is accounted for separately.
Three, match the creator layer. Compare the charged commission with the agreed rate and the eligible order value. Track refunds by order and settlement status. TikTok's financial statement guide distinguishes platform commission from affiliate charges and says affiliate commission is not reversed for a refund after the order has settled to the creator. A statement line called an affiliate commission refund may also represent release of a commission deposit, rather than recovery on a returned sale. Investigate the actual entry instead of booking an assumed reversal.
Creator payouts can be delayed by unresolved refunds or disputes under the affiliate payout rules. Record the dates and reconcile across periods where needed. Sample orders may appear in TikTok records; independently shipped samples may not. In both cases, reconcile physical units and landed cost to the stock ledger.
Four, separate recoverable VAT. For a fee that includes UK VAT at 20%, the VAT component is one sixth of the gross charge. Apply that calculation only where the invoice and your recovery entitlement support it. HMRC requires valid VAT invoices and qualifying business use; partial exemption and the Flat Rate Scheme can change recovery. A settlement statement on its own is not a valid VAT invoice. Do not apply the platform fee's tax treatment automatically to creator commissions or advertising.
Five, book the close. Split customer payments between revenue and output VAT, and recognise costs with any recoverable input VAT separated. Track unsettled balances and reserves as amounts still held, not expenses. Record samples leaving stock at landed cost, and assess any VAT implications of the sample arrangement separately. Use consistent cost classifications so TikTok, Shopify and Amazon contribution can be compared.
Illustrative Example: One Month at a £2m Supplement Brand
The synthetic month has £200,000 of customer payments after refunds, all subject to 20% VAT, and 6,700 delivered customer parcels. The parcel count is an independent assumption, not £200,000 divided by an exact £30 order value. Assume no customer-paid shipping, platform discounts, campaign charges or further post-settlement refunds in this example.
For modelling, platform commission is 9% including VAT and the Shipped by Seller service fee is 50p including VAT per delivered parcel. Check your category and account terms: TikTok's seller fee guide describes the commission calculation, while the Shipped by Seller rate card limits that parcel fee to the relevant fulfilment model.
Assume the eligible creator commission base is £100,000 excluding VAT after seller discounts and applicable refunds: 60% of net product revenue. At an assumed 12.5% rate this produces a £12,500 charge, with no additional creator VAT modelled. This is an explicit example assumption, not a claim that every creator agreement uses the same base or tax treatment.
Settlement bridge: where the cash went
Assume opening unsettled funds and reserves are zero, closing unsettled funds are £20,000 and closing reserves are £5,000. Creator commission is deducted through settlement; advertising, samples, fulfilment and stock are paid outside it.
| Settlement line | Illustrative amount |
|---|---|
| Customer payments after refunds, including VAT | £200,000 |
| Platform commission, including VAT | (£18,000) |
| Shipped by Seller fees, including VAT | (£3,350) |
| Creator commission charged | (£12,500) |
| Closing unsettled funds | (£20,000) |
| Closing reserves | (£5,000) |
| Bank receipts | £141,150 |
The bridge balances: £141,150 received plus £25,000 still held plus £33,850 of charges equals £200,000. Recoverable fee VAT does not add to these bank receipts.
Contribution: what the month earned before overheads
For this second table, assume valid invoices support full VAT recovery on the platform and parcel fees. Other cost lines below are after any recoverable VAT. The 160 samples are separate from the 6,700 customer parcels; their £5.20 unit cost is stock cost, and any sample dispatch cost is assumed included in the fulfilment budget. Product cost excludes these sample units.
| Contribution line | £ for the month | Share of net revenue |
|---|---|---|
| Customer payments after refunds, including VAT | £200,000.00 | |
| Output VAT | (£33,333.33) | |
| Revenue excluding VAT | £166,666.67 | 100% |
| Platform commission excluding recoverable VAT | (£15,000.00) | 9.0% |
| Parcel fees excluding recoverable VAT | (£2,791.67) | 1.7% |
| Creator commission: £100,000 eligible base at 12.5% | (£12,500.00) | 7.5% |
| Creator samples: 160 units at £5.20 | (£832.00) | 0.5% |
| Advertising: assumed 10% of net revenue | (£16,666.67) | 10.0% |
| Fulfilment budget | (£13,400.00) | 8.0% |
| Product cost: assumed 28% of net revenue | (£46,666.67) | 28.0% |
| Contribution before overheads | £58,809.66 | 35.3% |
The displayed, penny-rounded lines reconcile to £58,809.66. The assumed recoverable platform fee VAT is £3,558.33: £3,000 on commission and £558.33 on parcel fees. That is input VAT in this model, not an additional profit saving to subtract a second time. Contribution is not bank cash or net profit; reserves, stock purchases, tax payments and overheads still need their own treatment.
Put the Working File to Use
Keep an exceptions list for unmatched orders, unexpected commission rates, unresolved refunds and missing invoices. Each exception should have an owner and a next action. Reconcile the next period's releases and payouts to the closing balances carried forward.
For the wider context, read the TikTok Shop fee cost stack, the reconciliation diagnostic and VAT traps for supplement brands. Use current invoices and account terms for your own close.
Our TikTok Shop supplement specialists can help review the settlement and creator records together. Book a call and bring your recent settlements.