May 9, 2018

Understanding the Online Marketplace Agreement

Post by Louis Allsop – Tax Assistant @ ihorizon


One of HMRC’s more recent concerns has been tackling the online VAT fraud and error which has emerged with the growth of online e-commerce in the UK. A measure targeted at this was announced in the 2017 Autumn budget. This measure allows HMRC to hold online marketplaces jointly and severally for any unpaid VAT of a business arising from sales of goods in the UK via that online marketplace. Additionally, online marketplaces will be required to display a valid VAT number for all its sellers.


In line with the above, on 25th April 2018 HMRC published a bulletin detailing information on an agreement that online marketplaces can sign. This agreement intends to build a collaborative relationship between HMRC and online marketplaces whilst promoting VAT compliance by sellers using online marketplaces.


Signatories of the agreement commit to the following three actions (which do not create legally binding obligations):


  1. Provision of data: Online marketplaces commit to providing HMRC with data about businesses operating in their marketplaces. The information can be provided as a result of a voluntary or legal notice and at a minimum will enable HMRC to identify individual business sellers, calculate the value and volume of an individual business’ UK Sales and contact the business directly.
  2. Education for sellers: Online marketplaces agree to ensure that sellers have access to information about their VAT obligations in the UK.
  3. Responding to evidence of non-compliance: online marketplaces will have systems in place to take appropriate action when presented with evidence of a potential non-compliant seller. Moreover, marketplaces will respond to HMRC when sellers using their marketplace breach UK VAT rules.


HMRC have confirmed that requests for data to online marketplaces will be made on a case-by-case and risk basis and that they will publish the list of all online marketplaces signing up to the agreement. To reiterate, this agreement will affect businesses selling goods to UK consumers via online marketplaces where the goods are in the UK at the point of sale as well as the online marketplaces they use to do this.


To keep up to date with any ongoing developments be sure to follow @ihorizonUK on twitter and keep an eye on our blog.


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