Commentary

V3.268 Overview of deemed supply of goods by online marketplaces

Part V3 Supplies, acquisitions and imports

V3.268 Overview of deemed supply of goods by online marketplaces

Deemed supply of goods to and by online marketplaces

V3.268 Overview of deemed supply of goods by online marketplaces

As of IP completion day (11pm on 31 December 2020), a package of measures was introduced in relation to both imports inof consignments of £135 or less and online marketplaces (OMPs). The cumulative effect of many of these measures is broadly summarised in V3.305.

One part of this package was the introduction of VATA 1994, s 5A1 which provides for potential deemed supplies of goods both to and by OMPs. Broadly speaking, these deemed supplies arise where an OMP facilitates particular supplies of goods between a business and a customer. Where the provisions apply, the seller is deemed to supply the goods to the OMP and the OMP is deemed to supply the goods to the customer2. The seller will generally not need to charge UK VAT on its supply to the OMP as it will either be zero-rated3 (to the extent it takes place in the UK) or outside the scope of UK VAT4 (ie the place of supply will be non-UK). However, the OMP will need to account for VAT at the appropriate rate for the goods in question.

The overall aim of the measure is essentially to ensure VAT is accounted for on these supplies of goods in the context of the poor compliance records of some overseas sellers. By shifting the responsibility to account for VAT onto OMPs, the theory is that compliance is thereby improved.

The

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