The UK’s changes of e-commerce VAT rules on the 1 January 2021 made online UK and non-UK marketplaces (OMP’s) liable for certain seller transactions. HMRC also set basic record-keeping obligations for the marketplaces. The EU e-commerce VAT package , scheduled for 1 July 2021, uses similar rules.
How to determine if a marketplace facilitated a UK e-commerce sale?
The UK’s HMRC defines an OMP as any electronic interface (website or mobile application) such as a marketplace, platform, portal or similar that facilitates the sale of goods to customers. HMRC sets three basic tests for ‘facilitation’ to determine if the marketplace is now responsible for the seller’s transactions. Does the marketplace control:
- Setting of the terms and conditions of the sale
- Charging the customer for the sale
- Ordering and / or delivery of the goods to the customer
However, the following circumstances alone do not trigger the switch of VAT obligations to a marketplace:
- Payments processing
- Listing or advertising the goods
- Redirecting potential customers to the sellers own site for the purchase
OMP UK record-keeping obligations
To ensure proof of the correct UK VAT treatment, including determining the £135 intrinsic value of consignments liable to UK output VAT, HMRC expects marketplaces to maintain the following records:
- Confirmation if the goods where in or outside of the UK at the time of the sale
- Nature of the goods to determine which UK VAT rate to apply
- The intrinsic value of the goods if outside the UK to help determine if above or below the £135 threshold
- The country of residence of their third-party sellers
- VAT numbers for UK customers to allow for zero-rating
VAT Calc’s in real-time global Calculator and Auditor services produce instant and accurate UK calculations for marketplaces or sellers into their ERP or e-commerce system for compliance with the 2021 UK ecommerce changes. Our VAT Filer, sharing the same platform and transaction data, can then accurately complete UK filings.