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HMRC calls on online marketplaces to sign agreement tackling VAT fraud

carolineheath 26 April 2018 No comments

HMRC is asking all online marketplaces operating in the UK to sign an agreement to help tackle online VAT fraud and errors taking place on their platforms.

The agreement follows the Public Accounts Committee recommendation to put in place an agreement to set out collaborative working arrangements between HMRC and online marketplaces.

The agreement

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

List of signatories to be published

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.”

Jon Thompson, HMRC’s Chief Executive, said:

“The UK has already led the way in holding online marketplaces accountable for VAT fraud committed on their platforms.

The agreement goes even further to tackle this issue, with online marketplaces committing to helping their sellers understand their tax responsibilities and ensuring we have the information we need to take action against those who do not play by the rules.”

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.  Further information on the March 2018 changes are available in our VAT Briefing Note which can be found here.