HMRC mulls shifting responsibility for collecting VAT from thousands of online sellers to a handful of digital marketplaces.
The UK government has launched a consultation on 23 June 2026 on making online marketplaces (OMPs) responsible for collecting and remitting VAT on many domestic B2C sales made by UK-established sellers.
This consultation is arguably more ambitious than EU VAT policy and VIDA because it proposes applying deemed supplier rules to UK-established domestic sellers.
Marketplaces as VAT withholding agents
This consultation is about far more than online marketplaces. It signals HMRC’s willingness to transform digital platforms into VAT withholding agents, using them as the primary collection point for VAT
Today, this deemed supplier model applies largely to overseas sellers. The proposal would significantly expand marketplace liability and further centralise VAT collection.
The consultation, which closes on 18 August 2026, is part of HMRC’s strategy to tackle VAT non-compliance by collecting tax at the point of sale through platforms that already process transactions and hold extensive seller data.
HMRC wants to collect VAT where the data already sits: inside online marketplaces rather than thousands of separate businesses.
If implemented, marketplaces such as Amazon, eBay, Etsy and potentially food delivery platforms would account for VAT directly to HMRC instead of relying on individual sellers to register, charge and remit the tax.
HMRC is consulting on several important design features. One option would introduce a Minimum Platform Threshold, with £90,000 suggested as an illustrative level aligned with the current VAT registration threshold. Businesses below this could remain outside the rules, although HMRC is also seeking views on an alternative relief mechanism instead of a threshold.
The proposals would apply only to B2C sales. Private individuals selling unwanted possessions would remain outside the regime, while HMRC is also considering excluding second-hand goods businesses because of the interaction with the VAT margin scheme.
Food deliveries also in scope
Interestingly, the consultation also covers online food delivery platforms, meaning marketplace liability could extend beyond traditional e-commerce websites into the restaurant and takeaway sector.
No implementation date has been proposed. The government intends to consult further on draft legislation if it decides to proceed.
