In his recent Budget, the Chancellor announced plans to take action to stop overseas suppliers undercutting UK businesses (on the internet and on the high street). HMRC is to be given new powers to tackle VAT fraud by overseas businesses.

Under the new rules, HMRC will be able to require non-compliant overseas traders to appoint a tax representative in the UK and will notify online marketplaces, such as eBay, of traders who fail to pay VAT. Online platforms can be held liable for missing VAT if traders continue to evade VAT and they fail to act to prevent future fraud. The measures are expected to raise £875m for the Exchequer by April 2021.

The government will also introduce a due diligence scheme for the fulfilment houses where overseas traders store their goods in the UK. This will make it more difficult for firms evading VAT to trade. While the government continues to take action domestically, the global nature of the fraud means international action is also required. The UK has therefore raised this issue with the EU and its international partners and further action to combat such fraud can be expected.

Details of the measures aimed at tackling online VAT evasion are available to view here.