AAT urging government to make online platforms liable for collecting and remitting VAT

In order to reduce online VAT fraud, the AAT is calling for online marketplaces, including Amazon, eBay and Etsy to be liable for VAT collection and remittance in the UK.

The government introduced new rules in 2016, which has seen around 80,000 new firms register for VAT.

However, there is little information about how many of these firms have subsequently submitted tax returns or paid the correct VAT due. In addition, many of these registrations are believed to be false, cloned or registered in someone else’s name.

The AAT is urging the government to make online platforms liable for VAT collection on all online transactions, as increasingly happens overseas.

There is already an EU regulation requiring the same but it does not come into force until January 2021 when the UK has left the EU. The EU regulation also only applies to transactions below €150 rather than all transactions as AAT suggests.

Adam Harper, AAT Director of Strategy and Professional Standards, commented, “The impact on the taxpayer is significant because billions are not being paid, that’s billions that cannot be invested in public services as a result.

“There is arguably an even bigger impact on the success of legitimate small businesses who sell online. This is because they are competing against fraudsters who can offer an unjustified and illegal 20% VAT saving.

“Other countries have successfully adopted this practice, with Australia, the US and New Zealand all having done so recently.

“The Government must stop relying on the changes it introduced in 2016; realise the need to take more effective action and require online platforms to collect and remit VAT on all transactions. If it doesn’t do so, the UK will fall further behind its international peers, become increasingly attractive to fraudsters and continue to see many small businesses unnecessarily struggle as a result.”

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