Extending online marketplace liability to combat non-compliance
A proposal to extend current online marketplace VAT liability rules to sales on OMPs by UK based businesses, when their goods are in the UK at the point of sale.
In 2021, the previous government introduced reforms to improve VAT compliance in the online marketplace sector, making marketplaces liable for VAT on certain sales by overseas sellers. These reforms have improved compliance and helped tackle VAT losses.
However, non-compliance persists among both overseas and UK-based businesses, distorting competition and disadvantaging compliant firms online and on the high street.
The government is now consulting on extending marketplace liability to cover sales by UK businesses via these platforms, including domestic sales of goods such as retail items and takeaway food to further tackle non-compliance.
The consultation seeks views on design features, including how to minimise the impact on businesses not required to register for VAT. The consultation also seeks evidence on the administrative, commercial and operational impacts of these proposals on online marketplaces and businesses.