VAT and online marketplaces
Produced in partnership with John Fuszard of Sagars Accountants Ltd
VAT and online marketplaces

The following Tax guidance note Produced in partnership with John Fuszard of Sagars Accountants Ltd provides comprehensive and up to date legal information covering:

  • VAT and online marketplaces
  • Online marketplaces
  • VAT registration—UK sellers
  • VAT registration—overseas sellers
  • Validity of the seller’s UK VAT number
  • Joint and several liability and the ‘knew or should have known’ test
  • HMRC notification of joint and several liability
  • Appeals
  • Agreement with marketplace operators
  • Split payment consultation

This Practice Note is about the rules under which HMRC can impose joint and several liability on operators of online marketplaces for VAT that should have been paid by sellers of goods operating on those marketplaces.

The rules apply where either:

  1. for an overseas seller, the operator knew or should have known that the seller should be registered for UK VAT, or

  2. for a UK or overseas seller, HMRC has provided the operator with a notice that the seller is not meeting its VAT obligations

The rules were introduced by the Finance Act 2016 and amended, from 15 March 2018, by the Finance Act 2018 to allow HMRC to:

  1. apply the joint and several liability provisions for online marketplaces to include non-compliant UK sellers in certain circumstances (previously the provisions applied only to overseas sellers)

  2. hold an operator of an online marketplace jointly and severally liable for the unpaid VAT of overseas sellers operating on the marketplace where an overseas seller has not registered for UK VAT and the operator of the online marketplace knew or should have known that the seller should be registered for UK VAT, even where HMRC has not yet issued the operator with a notice, and

  3. require online marketplace operators to check the validity of and display the seller’s VAT number on its website

The EU’s VAT e-commerce Directive,