PROPOSED CHANGES TO VAT ONLINE MARKETPLACE LIABILITY: WHAT BUSINESSES SHOULD KNOW
HMRC and HM Treasury are consulting on proposed changes that could extend VAT liability rules for online marketplaces to certain sales made by UK-based businesses. The proposals are intended to address VAT non-compliance and create a more level playing field between compliant businesses.
What Is Being Proposed?
Existing rules introduced in 2021 made online marketplaces liable for VAT on certain sales made through their platforms by overseas sellers.
The Government is now considering extending these rules to cover sales made by UK-based businesses through online marketplaces.
The proposed extension could cover domestic sales of goods, including areas such as retail goods and takeaway food.
Why Is This Being Considered?
HMRC has identified continuing VAT non-compliance among both overseas and UK-based businesses selling through online marketplaces.
The Government's objective is to improve VAT compliance and reduce the competitive disadvantage faced by businesses that comply with their VAT obligations.
What Should Businesses Do?
These are currently proposals and not changes that businesses need to implement immediately.
Businesses selling through online marketplaces should nevertheless monitor developments and consider how any future changes could affect their VAT reporting and commercial arrangements.
Key Takeaway
The Government is consulting on extending VAT online marketplace liability to certain UK-based businesses. Businesses operating through online marketplaces should monitor the outcome of the consultation before making any changes.
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