UK VAT Joint Liability for Online Marketplaces
UK government made online marketplaces jointly liable for unpaid VAT from non-UK sellers.
What Happened
The UK government extended deemed supplier rules under VAT (Amendment) Regulations 2023, making online marketplaces like Amazon jointly and severally liable for unpaid VAT from non-UK sellers. Amazon updated seller requirements to enforce VAT registration compliance. Sellers without proper registration faced account suspension and HMRC penalties up to 100% of underpaid tax.
Effective January 2024, enforcement tightened April 2024
Non-UK sellers were selling to UK consumers without registering for VAT or remitting collected VAT to HMRC.
Resolution
- 1Register for UK VAT through HMRC online portal
- 2Appoint a UK VAT agent if non-UK resident
- 3Provide valid VAT number to Amazon seller account
- 4File quarterly VAT returns on time
- 5Ensure VAT-inclusive pricing on all UK listings
2-4 weeks for VAT registration, ongoing quarterly filing
200-500 GBP for VAT registration + agent fees + penalties up to 100% of underpaid tax
Lessons Learned
- •HMRC can pursue sellers directly AND hold platforms accountable
- •VAT registration is required before making any sales to UK consumers
- •Penalties for non-compliance can reach 100% of the underpaid tax amount
Prevention
- ✓Register for UK VAT before making first sale to UK consumers
- ✓Use VAT registration checker to determine if registration is required
- ✓Set up automated VAT return filing reminders