Overseas online retailers must pay UK VAT on items they sell which are stored within the UK at the point of sale. The marketplaces they use can be held liable for the online sellers’ VAT.
You’ll need to read this guide if you’re an overseas seller, supplying goods already in the UK at the point of sale, to UK consumers through an online marketplace. You must also read it if you are:
- a UK VAT representative for one of these overseas sellers
- an online marketplace allowing sales by those overseas sellers
If you’re selling goods to UK consumers from overseas, but outside these categories, you should read the general guidance VAT: overseas business selling goods in the UK.
You’ll be an overseas seller if you both:
- sell goods stored in the UK to UK consumers
- don’t have a business establishment in the UK
You’ll be established in the country where the functions of your business’s central administration take place. In working this out, you must take account of where:
- essential management decisions are made
- your registered office is located
- management meetings take place
If you’re not sure if you’re an overseas seller after considering these factors, the deciding factor is where essential management decisions take place.
An online marketplace is a website, or any other means by which information is made available over the internet, through which those other than the operator are able to offer goods for sale, whether or not the operator also does so.
It doesn’t matter if the online marketplace isn’t:
- established in the UK
- selling its own goods over the internet
You’ll be operating an online marketplace if you control access to it or its contents.
You must register for VAT in the UK if you’re an overseas seller making your supplies as a business activity in the UK.
There is no registration threshold in this situation.
As an overseas seller
Once you are registered, you must:
- charge VAT on your UK sales of goods
- account for and pay that VAT to HM Revenue and Customs (HMRC)
You can find more information on how to account for the VAT you owe in VAT Notice 700/12: how to fill in and submit your VAT Return.
As an online marketplace
HMRC can hold you jointly and severally liable for the UK VAT an overseas seller owes if they don’t meet their VAT requirements.
As the UK VAT representative of an overseas seller
HMRC can hold you jointly and severally liable for the VAT your overseas seller has failed to pay. This will run from the date you become their representative.
Failure to meet VAT requirements
HMRC will identify high risk overseas sellers who aren’t meeting UK VAT requirements. This includes, but isn’t limited to, failing to:
- register for VAT in the UK
- supply accurate VAT returns for sales in the UK
- pay the full liability arising from sales in the UK
If this is the case, we’ll try to contact you, asking what action you intend to take.
What we will do after this will depend on whether you are the seller, the online marketplace or the UK VAT representative.
Overseas seller liability
If you don’t register, HMRC can register you for VAT. HMRC can also consider the following:
- directing you to appoint a UK-established VAT representative
- requiring provision of a suitable security
These measures are in addition to the normal penalties HMRC can impose.
If you continue failing to meet UK VAT requirements, we can inform the online marketplaces you trade through of this. They may then decide to remove you from their marketplace.
Online marketplace liability
If you’re the operator of an online marketplace in which an overseas seller is failing to meet UK VAT requirements, HMRC can hold you jointly and severally liable for the VAT they owe from the date of any liability notice.
We’ll attempt to contact you so we can work together before we issue any formal joint and several liability notice (known as a liability notice). This initial period is known as the pre-notification period. However, sometimes the urgency of a situation may require HMRC to issue a liability notice straight away.
Any liability notice issued to you as an online marketplace operator will continue until withdrawn by HMRC or until you tell HMRC you are no longer the operator of that online marketplace. This may be the case even if the overseas seller pays the VAT they owe.
However, we can withdraw the notice:
- if we are satisfied the overseas seller has fully met all their VAT obligations and continues to do so
- where the overseas seller is removed from the online marketplace and, after a sufficient period of time, we are satisfied that the overseas seller is no longer a significant risk
You won’t be assessed for the overseas seller’s VAT if you remove them from your online marketplace within the time specified in your liability notice. You also won’t be assessed if HMRC is satisfied the overseas seller using your online marketplace is fully meeting its UK VAT obligations and continues to do so.
Overseas seller’s representative liability
If you’re the UK VAT representative of an overseas seller failing to meet their UK VAT requirements, HMRC can hold you jointly and severally liable for the VAT they owe from the date you become their representative.
HMRC can also require you to provide a suitable security.
There are some differences to the general appeals guidance on what to do if you Disagree with a tax decision.
You can’t appeal against a direction to appoint a UK VAT representative. You can appeal against:
- being required to register for VAT
- an assessment for VAT
- being required to pay a security
Online marketplace operator
You can’t appeal against:
- any pre-notification
- being issued with a liability notice
You can appeal against an assessment for VAT.
UK VAT representative
You can’t appeal against being made jointly and severally liable for an overseas seller’s VAT obligations. However, you can appeal against a requirement to provide a security.
More details on general rules for Online and distance selling for businesses are available.