HMRC fulfilment house VAT ‘due diligence’ scheme for overseas sellers coming in 2018

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In the 2016 UK government budget, the Chancellor of the Exchequer at the time, George Osborne, said that the British tax authority HMRC would be given more powers to deal with overseas sellers, selling into the UK (often on marketplaces such as eBay and Amazon), but who haven’t been paying their fair share of VAT.

Many marketplace sellers will be aware that they’re competing against sellers from overseas, often from China, who haven’t been playing fair on VAT. Progress has already been made it seems. As we reported a few months back 7185 overseas online retailers have registered for UK VAT in 2016.

That’s a dramatic increase on the 700 who did so in 2015. HMRC has been proactively contacting overseas sellers, and also offering help on their site in English and Chinese, to enable compliance and inform overseas sellers of their responsibilities and also the new HMRC powers to tackle VAT avoidance and evasion.

As HMRC notes on the website: “More and more UK retail businesses have a presence online and are having to compete with thousands of overseas online sellers, some of which are evading VAT. This abuse has grown significantly and now costs the UK taxpayer £1 billion to £1.5 billion a year. HMRC is taking action to protect the thousands of UK businesses from this unfair competition.”

But the next step will be ensuring fulfilment houses too play their part and cooperate. As HMRC say: “We’re introducing a due diligence scheme for fulfilment houses which is due to come into effect in 2018. Making fulfilment houses register with us, and carry out certain checks and record keeping, will make it more difficult for non-compliant overseas sellers to trade in the UK.”

There is no doubt, that for many years, UK sellers have been fairly aggrieved by the unfair competition that they’ve experienced from non VAT compliant sellers shipping from overseas, or fulfilling from UK centres. The government has responded and that slow machine is now moving into action. Have you noticed a difference yet?

3 Responses

  1. HMRC just need to do the same as the US authorities do and make Amazon or Ebay collect the VAT at source direct from sellers account rather than lying on sellers honesty, as I doubt HMRC pursue many Chinesse sellers througth their Court system for non-compliance.

  2. Yeah definitely made a difference on the lower end items that are below £3 for us. Suddenly our sales have returned and all our listings are now really popular like it was 10 years ago.

  3. They also need to sort out the postage as i dont understand how China can post an item to the UK for a total cost of £1.50 when that item retails in most UK storesfor £1.50 and yet would cost me £3.20 to send the same item to myself.


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