The Chancellor has today announced measures to secure the collection of UK VAT on the sale of goods made in the UK by overseas businesses that sell to consumers via online marketplaces. This will be achieved in one of two ways:
- HMRC will be given powers to direct an overseas business to appoint a VAT representative, with joint and several liability for the tax as well as giving HMRC the ability to require the payment of a security.
- HMRC will be able to hold the online market place jointly and severally liable for any unpaid VAT of an overseas business that sells goods in the UK via that online market place.
It is understood that these powers will not be applied automatically but will be reserved for high risk cases to tackle non-compliance. This measure is designed to drive compliance for those overseas businesses that should be charging UK VAT. New legislation will be implemented with effect from Royal Assent of the Finance Bill 2016.