Online marketplaces

Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Online marketplaces
  • Background
  • What is an online marketplace?
  • Changes to imports and sales via marketplaces from 1 January 2021
  • Sales made via marketplaces to consumers (B2C) and the goods imported
  • Sales made via marketplaces to consumers (B2C) and the goods are in the UK at the time of sale
  • Supplies made directly to end consumers (B2C) and the goods are imported
  • Sales made via marketplaces to business customers (B2B) and the goods are imported
  • Supplies made directly to business customers (B2B) and the goods are imported
  • Supplies where the consignment is valued at more than £135 (B2B and B2C)
  • More...

Online marketplaces

This guidance note deals with the various anti-avoidance provisions that were introduced by the Government in respect of supplies made via online marketplaces. This note includes the provisions coming into effect from 1 January 2021.

Background

HMRC has introduced a number of changes to the law since 2016 in an attempt to combat VAT avoidance by businesses located in both the UK and overseas who sell goods via online marketplaces. This guidance note provides an overview of the changes that have been introduced.

What is an online marketplace?

In order to work out whether a business needs to consider the implications, it is necessary to determine what an online marketplace is.

The Taxation (Post-transition Period) Bill provides a legal definition of a marketplace and it states:

(1) In this Act ―

‘online marketplace’ means a website, or any other means by which information is made available over the internet, which facilitates the sale of goods through the website or other means by persons other than the operator (whether or not the operator also sells goods through the marketplace); ‘operator’, in relation to an online marketplace, means the person who controls access to, and the contents of, the online marketplace provided that the person is involved in ―

  1. a)

    determining any terms or conditions applicable to the sale of goods,

  2. b)

    processing, or facilitating the processing, of payment for the goods, and

  3. c)

    the ordering or delivery, or facilitating the ordering or delivery, of the goods.

(2) For the purposes of subsection (1), an online marketplace facilitates the sale of goods if it allows a person to ―

  1. a)

    offer goods for sale, and

  2. b)

    enter into a contract for the sale of those goods.

Changes to VAT treatment of overseas goods sold to customers from 1 January 2021; The Taxation (Post-transition Period) Bill; De Voil Indirect tax Service V3.502

Online marketplaces that meet the above conditions will be treated as ‘facilitating’ the sale from a VAT perspective. Online marketplaces that facilitate the sale are treated as

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