HMRC Considers Extending Marketplace VAT Liability Rules
The UK's HM Revenue & Customs (HMRC) is considering extending online marketplace VAT liability rules from overseas sellers to domestic businesses, aiming to reduce non-compliance and level the playing field for compliant retailers. The government estimates that tens of thousands of UK-based businesses are not fulfilling their VAT obligations through marketplaces, costing hundreds of millions in lost revenue annually. Under the proposal, platforms would be responsible for collecting VAT on sales by UK businesses exceeding £90,000 per platform. The consultation period ended on 18 August 2026 and no final decision has been made yet. The reform is expected to impact how VAT-registered retailers handle transactions through online marketplaces while leaving other channels like physical stores unaffected. HMRC also seeks feedback on whether a lower threshold might be more effective in addressing non-compliance. The government aims to use the additional revenue from improved compliance to support high street businesses by improving the business rates system.
Topics: online marketplaces retail compliance VAT