HMRC, the UK’s tax authority, is currently approaching non-UK based online retailers who sell into the UK through marketplaces such as Amazon and eBay.
Essentially they’re looking to identify sellers who should be, but aren't, registered for and paying VAT. There’s also been some reports that in extreme circumstances they’re temporarily shutting down online accounts until the holders can prove compliance and settle any back taxes owed. For many international businesses, selling into the UK is already hard enough without this added complication to consider, so we’ve put together this page of everything you need to know about the current clampdown. If you need further assistance then get in touch - our UK based team of advisors can give you advice and assistance based on your specific situation.
Why are HMRC looking into international e-retailers?
HMRC are continually looking to identify businesses and individuals that should be paying taxes; it just so happens this time around it’s international e-retailers who are the targets. Often technology and the creation of new services, such as affordable product fulfilment, move faster than governments, leading to opportunities and the potential for retrospective action once they do finally catch up. In this instance, the creation of marketplaces and fulfilment services moved so quickly that HMRC have been left behind, and are only now coming to the realisation that they’ve missed out. Unfortunately though, for those who unwittingly, and in many cases unknowingly, avoided VAT, HMRC have the power to suspend accounts and chase down taxes owed.
Why is there confusion with UK VAT?
There’s a common misconception that to be liable for UK VAT, businesses that stock products in UK warehouses and fulfilment houses to be sold to UK consumers, needed to exceed certain income thresholds. Unfortunately that’s not the case, and regardless of the volume of products held in the UK or the amount of money earnt, ALL non-resident businesses have to register for VAT immediately, if their products are held here.
What information are HMRC looking for?
HMRC are interested in historic sales made into the UK, specifically through fulfilment services such as our own, or Amazon’s. They are going as far as to ask some sellers for their Amazon login details so they can check their transaction history for themselves.
Amazon is now getting in touch with some sellers and suspending accounts until HMRC are satisfied that the seller is compliant. HMRC require sellers to provide a lot of information, including sales and purchase histories, Amazon login details, annual accounts and other important documents.
What can HMRC do to international businesses?
If a seller has been trading in the UK for many years without a UK VAT number, they do want them to pay back taxes. There’s been talk about an amnesty in the past, but currently there are no formal plans to implement one. Part of HMRC’s reasoning is that they feel international e-retailers have had an unfair advantage over UK businesses and they intend to correct that. Ultimately if an international seller continues to evade HMRC, they have the power to shut down accounts and effectively paralyse businesses.
We can deal with HMRC on your behalf
Dealing with HMRC can be complicated at the best of times, even without language barriers and technical legal terminology. Our team of UK VAT experts can help identify whether you’ve been non-compliant and act on your behalf in dealing with HMRC. We’re an independant advisor and as such we’ll give you the best advice for your business and specific circumstances. Often in these cases, taking the initiative and contacting HMRC as soon as feasibly possible will result in lower fines and a more reasonable response, so we’ll work quickly to identify the best route forwards.
UK Postbox’s VAT Services
We act as a VAT Agent for international businesses and can help you navigate the complexities of selling into the UK and EU. The key areas we help with are: