Consultation on extending VAT online marketplace liability

The government is looking to strengthen VAT compliance in Online Marketplaces (OMPs) and is seeking views on how the current rules can be more effectively enforced. It is also proposed that OMPs' responsibility for VAT collection be extended to domestic sellers. 

HMRC believe there are a significant number of businesses that are not currently meeting their VAT obligations. They are particularly concerned about: 

• Overseas businesses, which, unlike domestic businesses, must account for all VAT on all sales regardless of turnover, that disguise themselves as a UK business and fail to account for the correct amount of VAT. 
• UK businesses splitting their sales across platforms to keep below the registration limit. 
• UK businesses registering for VAT, reclaiming input VAT and charging output VAT on sales, but accounting for less VAT than required or dissolving the business without paying their VAT liability.
• VAT losses in the delivered hot food sector. 

The government has stated that there is an unfair advantage for non-compliant businesses over taxpayers who are compliant.  

• This tax evasion enables non-compliant businesses to undercut those that are compliant, including high street companies.

The proposals aim to make OMPs account for VAT on certain sales facilitated in the UK. This may include:

• Retail goods sold through online marketplaces. 
• Restaurant and takeaway food sold through delivery platforms. 
• Other goods sold by UK businesses to consumers through OMP's. 

The government wants the reform to meet the following objectives:

• Tackle VAT non-compliance in the online marketplace and reduce competitive distortion between compliant and non-compliant businesses. 
• Make the policy workable by minimising the administrative burden. 
• Make the policy fair by protecting smaller businesses that are not required to register for VAT. 
• Support UK businesses by ensuring that revenue generated from improved compliance helps the government increase financial support for high street businesses.  

Two separate options are being consulted on: 

• A Minimum Platform Threshold (MPT) where OMP's only become liable for VAT where a UK business's sales on that platform exceed a certain threshold. 
  •  An MPT of £90,000 is proposed, but the government is also seeking views on a lower MPT.
• VAT relief for smaller businesses, where those below the VAT threshold could potentially benefit from some form of VAT relief. 
  • This may be particularly helpful for small businesses that do not want to be registered for VAT. 
  • The relief would only be available to UK-based businesses below the VAT threshold. 
• The government is also inviting alternative solutions that meet the objectives laid out above. 

Responses can be emailed to This email address is being protected from spambots. You need JavaScript enabled to view it. or submitted via HMRC's online form. The closing date for submissions is 18 August 2026.

Useful guides on this topic

Online Marketplaces: Selling goods in the UK
When do you have to register for UK VAT? When is UK VAT payable? What amount is VAT payable on? What information do you have to give the marketplace provider? What will it do with that information?

Place Of Supply: Goods
The Place Of Supply (POS) of goods determines whether the supply is within the scope of UK VAT and whether VAT is payable on that supply.

EU VAT e-commerce package: From 1 July 2021
On 1 July 2021, a number of European Union (EU) VAT changes took effect, including the introduction of two new One Stop Shops. What are the changes? Who is affected? 

Registering for VAT
When should a business register for and charge VAT? What are the VAT registration thresholds? What penalties might HMRC issue for late notification of registration? When do you need to file a VAT return?

Exporting goods from GB from January 2021
The post-Brexit transition period ended on 31 December 2020. What do the new rules mean? Have all of the relevant applications been made in order to continue trading smoothly?

Importing goods into GB from 1 January 2021
The post-Brexit transition period ended on 31 December 2020. HMRC issued guidance for importing goods.

External link

Extending VAT online marketplace liability to combat non-compliance

Extending online marketplace liability factsheet

Question 1: What is your name or your business/organisation’s name?

Question 2: Are you responding to this consultation as:

• A UK-based business selling on OMPs.
• An OMP.
• A representative body.
• An organisation.
• An individual.
• Other (please provide details).

Question 3: If you are responding as a business, please tell us about:

• The number of employees in your business.
• Your annual turnover (this can be a range).

Question 4: Are you registered for VAT in the UK?

Question 5: Are you a sole trader, a partnership, or an incorporated company?

Question 6: What types of goods do you sell? What proportion of your sales are made up of each?

Question 7: Do you sell on OMPs? If so, how many?

Question 8: Do you also make sales via any other channels? For example, your own website or a physical shop. What influences this pattern?

Question 9: If you sell via other means than an OMP, what is the approximate percentage split of sales per channel?

Question 10: Are you registered for VAT in the UK?

Question 11: What types of goods are available on your platform? What proportion of your sales are made up of each?

Question 12: What proportion of businesses on your platform are VAT-registered businesses?

Question 13: What proportion of businesses on your platform turnover less than £90,000?

Question 14: What proportion of businesses on your platform are UK-established?

Question 15: If you are a takeaway food delivery platform, do you also facilitate the sales of other goods? What types of goods, and what proportion?

Question 16: Please provide any further information about your organisation or business activities that you think might help us put your answers into context.

Question 17: What suggestions would you offer for how the government could improve the current rules?

Question 18: As the proposed policy change could have varying impacts on specific sectors, please state any sector-specific impacts you anticipate following the proposed rule change.

Question 19: What are your views on the MPT as a policy option? If the MPT is set at the VAT threshold, how else could non-compliant smaller businesses be addressed?

Question 20: What are your views on an MPT set lower than the existing VAT registration threshold, and would you be supportive of such a policy if the funds raised were used for improvements to the business rates system for high street businesses?

Question 21: If you are a UK business under the VAT registration threshold, how would a scheme such as this affect the impact of the overall policy for you? Would it make you more or less likely to voluntarily register for VAT?

Question 22: For all respondents, what would the administrative impacts of implementing such a scheme be?

Question 23: What other options could you suggest for reducing the impact on the smallest UK businesses?

Question 24: How would the different options for second-hand goods impact your business? How would you address these impacts?

Question 25: If second-hand goods are excluded from OMPL, what risks remain around misrepresentation of goods as second-hand?

Question 26: What would the administrative impacts of implementing the policy options outlined be to your business?

Question 27: How long would it take you to implement the changes that would be needed to administer this policy?

Question 28: What might be the additional costs to your business as a result of this policy?

Question 29: How long would it take you to implement the changes outlined in this policy proposal?

Question 30: How do you think that this proposal would affect your goods pricing decisions, cash flow, and influence how and where you sell?

Question 31: How would the zero-rating of supply to OMPs impact your VAT accounting practices? Would you be in a net repayment position?

Question 32: Do you operate the VAT FRS? If so, what impact would losing access to the scheme to continue selling through an OMP have on your business?

Question 33: If the OMP were to account for VAT on your behalf, would your business preference be to register for VAT voluntarily or would you implement a different commercial approach?

Question 34: What might be the additional costs to your business as a result of this policy?

Question 35: How long would it take you to implement the changes outlined in this policy proposal?