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UK HMRC automatic VAT assessments for non-compliant overseas sellers

Starting 1 September 2022 automatic VAT liability assessments for non-UK online sellers where inaccurate returns

HMRC is to start imposing automated VAT assessments on non-resident online sellers where their VAT returns indicated inaccurate information. These assessments will cover the period prior to December 2022.  Sellers will have the regular right to appeals and statutory review.

Aside from raising the assessments, HMRC will notify any marketplaces the seller is using, and issue the marketplace with a joint and several liability notice – which makes the marketplace potentially liable for any unpaid VAT. The marketplace will then likely freeze the seller’s account.

Since 2017, marketplaces have been subject to the UK VAT liabilities of their third-party sellers UK transactions where they ‘knew or should have known’ that overseas online businesses should have been UK VAT registered”. This was extended in April 2018 to a voluntary agreement on the exchange of sellers’ data and monitoring.

In January 2021, marketplaces UK VAT obligations were extended where the platform facilitated certain overseas’ sellers transactions.

European marketplace liabilities

Other countries requiring marketplace reporting include: FranceGermany and Italy.  The EU’s DAC 7 standard tax reporting requests standard will come into force on 1 January 2023.

The EU is also reviewing a full VAT liability for digital platforms as part of its VAT in the Digital Age reforms.


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