Online marketplaces in the UK will soon be forced to collect Value Added Tax (VAT) on all sales made in the country by overseas sellers in a major crackdown on tax fraud.
VAT fraud by international sellers on platforms like Amazon and Ebay are understood to cost the UK taxpayer £1.5 billion a year and a failure to combat it has been attributed to the decline of the high street in recent years.
Currently websites like Amazon and Ebay are considered facilitators of overseas sales made online in the UK.
According to leaked HMRC documents seen by the Financial Times, the government plans to end this status from January, instead considering them vendors and requiring them by law to hand VAT on all sales made in the UK to the government.
“Following the end of the (Brexit) transition period, the UK will need to introduce a UK-wide model to ensure UK businesses are not disadvantaged by competition from VAT-free imports,” the leaked document read.
Head of campaign group Retailers Against VAT Abuse Schemes Richard Allen told the Financial Times: “Common sense dictates it is far easier to police these facilitators than it is to police hundreds of thousands of sellers many of whom are merely temporary shells for organised tax evaders,” he said.
High street retailers have long been calling for such measures to level the playing field, criticising online marketplaces unfair advantage of largely being able to sidestep paying VAT thus offering cheaper items.
The document stated that the policy was not up for consultation suggesting that the measures are likely to be implemented next year.