Recommendation 21

The government introduced a legislative change in January 2021 to tackle tax non–compliance through online marketplaces. This removed responsibility for accounting for the VAT on sales from overseas retailers, and instead made the online marketplaces liable for the VAT.61 Overseas sellers can evade VAT by falsely presenting themselves as UK established for VAT purposes.62 Online marketplaces need to determine the correct 53 C&AG’s Report, para 2.9 54 Q 41 55 Q 41 56 Q 59 57 C&AG’s Report, para 2.18 58 Q 60 59 Qq 61–62 60 Q 65 61 C&AG’s Report, para 2.6 62 C&AG’s Report, para 2.14 15 liability or demonstrate they have taken reasonable steps to do so, including whether sellers are UK–established.63 HMRC told us it is for the online marketplaces to do the majority of the work verifying the establishment of businesses selling through their platforms, but it does some enforcement work in this area. It also said it is actively supporting online marketplaces including by developing new guidance for them which will be available in early 2025.64