If you are a business or an individual based outside of the UK but selling goods to the UK through an online marketplace such as Amazon or eBay you should be aware of the recent enforcement changes. The UK tax authority HM Revenue & Customs (HMRC) was given new powers in Finance Bill 2016 (September 2016) to make online marketplaces jointly and severally liable for VAT evasion through online sales. The major online marketplaces in the UK are eBay and Amazon but this legislation relates to all online marketplaces regardless of size. If a trader on those online marketplaces does not charge the correct UK VAT then the marketplace is equally liable for the VAT which should have been paid.
In the Autumn budget on 22 November 2017 they reinforced these changes with an obligation for online marketplaces to display the traders VAT number on the site and there are penalties for failure to comply with this requirement.
eBay and Amazon were also quizzed by the public accounts committee in September 2017 regarding their progress in stopping VAT fraud.
HMRC have issued significant joint and several notices to eBay and Amazon which have caused both marketplaces to block those traders and any accounts linked to those traders. This has resulted in over 2.3million listings in the 12 month period being taken from the site.
Both Amazon and eBay also have their own internal risk management teams whose exclusive role is to identify VAT fraud and who are pro-actively blocking accounts where valid UK VAT numbers are not provided.
The overall cost of failure to pay VAT in this sector is estimated to be £1billion – £2 billion per year.
We have prepared a useful guide to online sellers UK VAT registration requirements on our website and are actively assisting a number of overseas businesses to fulfil their UK VAT obligations including introducing technology to make the recording and reporting of the transactions more straightforward.
If you would like assistance with your obligations please contact andrew@beatons.co.uk.
Download our UK VAT guide for online sellers