Proposed VAT changes could hit online market places and delivery agents
The government has announced a consultation that could significantly impact the VAT accounting treatment for online market places (“OMP”) and possibly delivery agents, say leading tax and advisory firm Blick Rothenberg.
Alan Pearce, VAT partner at the firm said: “This is part of the alignment of how EU and non-EU goods will be treated after the UK leaves the EU Single Market and Customs Union on 1 January 2021. It is being proposed that online consumer sales by overseas suppliers via an OMP (such as Amazon and eBay, etc.) the obligation to account for VAT will shift from the supplier to the OMP. There is currently a similar obligation for platform providers to account for VAT on consumer sales of digital services, but it is envisaged that this will extend to OMP’s for all B2C sales of goods valued below £135. “
He added: “Where an OPM is not used but the goods are sold directly to UK consumers from the seller’s own website, the seller will remain responsible for the VAT. However, HMRC are looking at ways in which the delivery agents (such as Royal Mail, DHL, UPS, etc.) can police the VAT system and ensure that their overseas customers are registered and accounting for VAT correctly. “
Pearce said: The consultation is an attempt to ensure VAT is collected on all consumer sales in the UK by moving the payment point away from the importation to the point of supply in the UK. However, transferring the liability for the VAT to the OMP, and asking delivery agents to verify the VAT status of its customers, is likely to add significant extra administration costs to both these sectors.
He added: “These changes will only apply to B2C sales valued at £135 or less. This is the same limit for customs duty relief. However, the current £15 limits that avoids any import VAT will be abolished from 1 January 2021. Therefore, VAT will be due on all standard rated sales up to £135 and HMRC are looking at ways to collect this tax efficiently. Placing the obligation on the OMP will mean that HMRC only needs to deal with a much lower number of UK taxpaying entities compared with the much larger number of overseas suppliers across the EU and further afield”.