News: How the UK is Fighting Online VAT Fraud from Overseas sellers

In recent years, the UK has led the way in fighting VAT evasion on goods sold by overseas sellers online.

On the 15^th March 2018, online marketplaces in the UK were made accountable for the VAT fraud committed by users selling on their platforms.

This was called Joint and Several Liability (JSL), an initiative for online marketplaces. The British Government created JSL to target sellers based in the UK or overseas who fail to pay the correct rate of VAT to the UK Tax Authorities.

The Responsibility of Marketplaces 

An online marketplace is defined in VAT legislation as ‘a website, or any other means by which information is made available over the internet, through which persons other than the operator are able to offer goods for sale’.

If the online marketplace does not remove sellers who fail to pay the correct rate of VAT and have been issued a notice by HMRC, then HMRC will pursue the marketplaces themselves for any future unpaid tax.

Since the introduction of JSL in March 2018, the market place is now accountable for VAT due, where there was knowledge that an overseas seller needed to register for VAT.

Our CEO Claire Taylor has expressed ‘By making the larger marketplaces jointly liable for VAT, it shifts the focus to educating sellers on their obligations when trading in Europe.’

Furthermore, marketplaces must ensure that all sellers using their platforms display a valid VAT number. This creates transparency and a level playing field for both UK based businesses and overseas sellers.

According to the financial Secretary to the Treasury, Mel Stride, he states that ‘We are clear that everyone must pay their fair share of tax and tackling tax evasion in all its forms is a top priority for the government.’

Fulfilment House’s 

In recent years, the British government have pledged their commitment to tackling VAT crime. They have also introduced the Fulfilment House Due Diligence scheme in 2018. This scheme aims to making Fulfilment houses in the UK jointly liable for the VAT on goods stored by overseas sellers. 

To date, the following marketplaces have signed this agreement through HMRC to build a collaborative relationship to promote VAT compliance by its users:

Amazon, eBay, Fruugo, Wolf& Badger, Etsy, Asos and Flubit.

At SimplyVAT.com we are keen to educate online sellers in both the UK and abroad on the importance of VAT compliance.

We’ve also created bite sized learning modules in collaboration with the Institute of Export to help professionals and businesses wishing to understand further VAT laws.