New rules to tackle VAT evasion

Online marketplaces that provide a platform for businesses to sell to UK-based consumers may be held liable by HMRC if those traders are not paying the correct amount of VAT.

The joint-and-several liability (JSL) for online marketplaces, which was first announced in Autumn Budget 2017, came into force on 15 March 2018 in a bid to crack down on tax evasion.

The new powers put the onus on online marketplaces to ensure their sellers are VAT-compliant, as failing to do so could make them liable for any unpaid VAT on a business’ future sales.

Online marketplaces will also be responsible for making sure VAT-registered firms display a valid VAT number on the site.

Mel Stride, financial secretary to the Treasury, said:

“While the honest majority pay what they owe, some businesses that sell goods online to UK shoppers are failing to pay the correct amount of VAT.

“This behaviour unfairly undercuts businesses trading in the UK that play by the rules, abuses the trust of buyers and deprives the government of significant.

“Everyone must pay their fair share of tax, and tackling tax evasion in all its forms is a top priority.”

Mike Cherry, chairman of the Federation of Small Businesses, added:

“Online marketplaces are often a natural complement to high street shops. Like any good market organiser, these websites have a responsibility to ensure all traders are playing by the rules.”

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