Autumn Budget 2017: VAT legislation extended for online marketplaces

Online marketplaces through which non-UK businesses do not meet their UK VAT obligations (and there is no VAT registration limit for businesses without UK establishments) can be held jointly and severally liable for the unpaid VAT liability under Section 77B, VAT Act 1994, which was implemented in September 2016.

The change extends the current provisions to UK established businesses.

There will also be a new requirement for an online marketplace to ensure that the seller’s VAT registration number displayed on their website is valid.

A penalty will be introduced for failure to meet these requirements.

The government will also explore, with digital platforms, opportunities to promote better tax compliance by their users, publishing a ‘call for evidence’ in spring 2018. The government expects digital platforms to play a wider role in ensuring that their users are compliant with the tax rules and do not unfairly undercut businesses that comply with their tax obligations.

Any online marketplace selling goods in the UK, failing to adhere to these requirements, will be jointly and severally liable for unpaid UK VAT and might also incur a penalty.