Alternative method of VAT collection – split payment

At the Spring Statement, the government announced a consultation on alternative methods of VAT collection. This consultation will seek views from a wide range of stakeholders on possible options for how a potential split payment mechanism could operate to combat online VAT fraud. A split payment would enable extraction of VAT in real time and for deposit with HMRC. This would reduce the opportunity for non-payment of VAT by overseas merchants trading online through sites such as Amazon and eBay.

The consultation sets out the government’s emerging thoughts, based on engagement with stakeholders so far. It sets out how the potential mechanism could work, how it could be enforced, and considers a number of options for how the VAT could be accounted for.

HMRC will be running a series of collaborative workshops to test emerging views over the spring and summer.

The consultation closes on 29 June 2018.