HMRC Working With Online Marketplaces to Tackle VAT Fraud

HMRC has asked all online marketplaces operating in the UK to sign an agreement to help tackle online VAT fraud and errors taking place on their platforms in a bid to make trading fairer for law-abiding businesses, big and small, who share trading platforms with less scrupulous companies.

Online marketplaces have a responsibility to ensure their sellers understand the tax rules and prevent fraud from happening on their watch.

To assist HMRC in tackling online VAT fraud and error, the agreement asks online marketplaces to commit to:

• educating online sellers from the UK and abroad about their VAT obligations in the UK either via their own help and support or by directing them to HMRC’s GOV.UK guidance
• responding swiftly when notified by HMRC that sellers are not playing by the VAT rules, and setting up a system to take appropriate action 
• finding a suitable and lawful way to provide HMRC with information about their sellers, when requested 

HMRC will publish the list of all online marketplaces that sign up to this agreement. If an online marketplace that signs the agreement fails to meet the commitments, HMRC will remove them from the list.

Mel Stride, the Financial Secretary to the Treasury, said "The growth of online marketplaces has helped many businesses to sell more products across the UK and has contributed greatly to the economy.

However, there is a small minority of sellers not paying their fair share of tax, and we’re committed to working with marketplaces on multiple levels to tackle tax evasion."

This agreement builds on world-leading powers, known by the term joint and several liability (JSL) rules, which hold online marketplaces accountable for VAT fraud committed by sellers on their platforms.  These were first introduced in September 2016 and were strengthened further in March 2018.  Only time will tell if these changes will be enough to level to playing field when selling online.