Saturday, November 25th, 2017
Not many people will have noticed in the Budget 2017 that HMRC have introduced VAT joint and several liability for online marketplaces. This will enable HMRC to hold online marketplaces jointly and severally liable for any unpaid VAT of an overseas businesses arising from sales of goods in the UK via the online marketplace where that marketplace knew or should have known that the overseas business should be registered for VAT in the UK.
This VAT joint and several liability measure was first introduced by HMRC to combat MTIC VAT fraud in such areas as mobile phones and computer chips. Now HMRC have concerns that online overseas sellers should be registered for VAT and are sidestepping the rules by incorporating shell UK companies and selling their goods online even though they are above the VAT registration threshold.
Online marketplaces will be expected to develop new or enhance existing processes to check the validity of VAT numbers and review non-UK seller information to identify those businesses that are not VAT registered but potentially should be.
Our experience with similar measures introduced by HMRC is that online marketplaces will need to enhance their due diligence to satisfy HMRC that they took all reasonable measures to ensure they did not know or ought not to have known that there could be a VAT loss.
Please contact M&R Tax if you require further information with regard to enhancing your due diligence. The full HMRC link is below: