9 February 2017
HMRC have revealed that more than 7,000 internet retailers came forward to register for VAT following new powers that came into force in September 2016 which hold online marketplaces liable for unpaid VAT by overseas retailers.
The crackdown is expected to close an annual £1bn gap caused by a loophole that allowed overseas sellers to not charge VAT on goods sold through online marketplaces.
Under the new rules, HMRC can now force overseas retailers to appoint a UK-based VAT representative or provide a financial guarantee. If the overseas retailer fails to comply with HMRC’s directions then the online marketplace they use to sell their goods, such as Amazon and eBay, could be held liable. Additionally, as these goods are often stored in UK warehouses for distributions to UK customers, warehouses will have to join a due diligence scheme by 2018 or face penalties. The due diligence scheme will introduce stricter rules regarding the fulfilment of overseas sellers' goods.
Should you have any questions about the new powers that HMRC have, or you want to know if they affect your business, please do not hesitate contact me or a member of the team.
