In a recent press release, HMRC announced that new powers which impact on online sellers recently took effect. The new powers are aimed at ensuring online sellers pay the right tax and don’t leave other high street and online businesses at a disadvantage. These were first announced by the Chancellor at Autumn Budget 2017. Brian Keegan, Director of Public Policy and Taxation discussed the issue of VAT accountability in the digital economy in a piece in the Sunday Business Post last month which you can read on our website.

The new rules strengthen powers to make online marketplaces accountable for VAT fraud committed by online sellers on their platforms. These powers are known by the term joint-and-several liability (“JSL”) for online marketplaces.

If sellers based in the UK or overseas are not paying the correct VAT when selling in the UK, and are not removed from the site following the issue of a notice by HMRC to the marketplace, then HMRC will pursue the marketplaces themselves for any future unpaid tax by those sellers.

For any sales made from 15 March 2018 onwards, the rules also make online marketplaces liable for VAT where they knew or should have known that an overseas online seller should have been VAT-registered but was not.

Marketplaces must now also make sure sellers using their platforms display a valid VAT number on the site, when they are given one.

According to the Press Release, the UK has led the way in tackling this type of fraud and was the first country to introduce tough powers to tackle VAT evasion by overseas sellers in September 2016.

In addition, businesses can apply to register for the Fulfilment House Due Diligence Scheme from 1 April 2018. This scheme, which was first announced at Budget 2016, will require businesses that store imported goods for or on behalf of overseas sellers from outside the EU to keep certain records and perform certain checks on the goods they are storing.