HMRC’s improved powers to attack overseas online sellers

Effective from 15 September 2016, HMRC have new and improved defences against businesses selling through online marketplaces, who should be VAT registered in the UK but are not.


Where goods are sent from outside the EU to individuals in the EU, these are imports for VAT purposes. Import VAT is due where the value of the consignment is more than £15 (this threshold is no longer applicable to goods coming from the Channel Islands).

However, as soon as that business imports bulk goods into the UK and makes sales from within the UK (for example, using a fulfilment house), that sale is subject to UK VAT as that sale is deemed to be made in the UK. If the seller has no establishment in the UK, there is no registration threshold, and the seller is liable to immediately register for VAT in the UK under VATA 1994 Sch 1A.

Quite clearly, many sellers who sell through online marketplaces such as Amazon either did not know of this obligation or wanted to avoid registering for VAT in the UK, as the VAT charge would eat in to their margin. By being based overseas, it was hard for HMRC to enforce registration on these businesses. HMRC want to defend UK VAT-registered businesses against overseas sellers undercutting them.

What are the new powers?

Initially, HMRC will make contact with the seller to request VAT registration. If the seller does not comply, HMRC now has the power to:

  • Direct the seller to appoint a UK-established VAT representative – that is, an agent for VAT who is jointly and severally liable for the VAT due. (This was previously possible, but the UK establishment of the VAT rep was not necessary)
  • Require the seller to provide security against VAT debt
  • Hold the marketplace through which the sales are made jointly and severally liable for the VAT debt. This would usually be preceded by requesting the removal of the seller from the online marketplace within a specified time frame.

If you are an overseas seller making sales in the UK with no establishment in the UK, you must register for UK VAT from the date of the first sale. Should you require further advice in this regard, please contact us.

For more details see the HMRC Guidance.

If you are a UK business selling to individuals within the EU, you may have VAT obligations in other member states. Contact Barnes Roffe to find out more.


By: Jasmine Worth

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