Online marketplace proposal is too vague

The government should rethink its proposal to ensure online sellers pay the correct VAT according to the Chartered Institute of Taxation (CIOT).

HMRC has proposed that overseas traders should appoint a UK tax representative who would be liable for their VAT or provide security to guarantee payment. This would ensure that non-EU traders who sold goods to UK consumers using online marketplaces paid the correct amount. Failure to comply could lead to the online marketplaces becoming liable for the unpaid VAT.

Responding to HMRC’s fulfilment house due diligence scheme consultation the CIOT said the measure could capture too many businesses through the use of imprecisely defined terms. ‘Fulfilment house’ is one these and includes online marketplaces. This risks many businesses including small and medium-sized enterprises being burdened unnecessarily.

The CIOT said the primary targets should be overseas sellers who seek to evade the tax rather than legitimate...