VAT News

UK Finance bill 2016 enacted

This week, Finance Act 2016 was enacted into UK legislation, and a key part of this from a VAT perspective was the new powers given to HMRC by the law to deal with non-compliance by non-established online traders.

In recent years, the digital economy has grown at a rapid pace, and one of the key growth areas has been the online sales of goods via online platforms, such as Amazon and Ebay. Whilst goods are sold through the platforms, the ownership, and thus the VAT obligations generally remain with the manufacturer/importer of the goods. Of course, many of these traders are established outside of both the UK and the EU.

Over time, it has become apparent that many non-established businesses are not fully complying with their UK VAT obligations, with the result being a loss of revenue to HMRC, and local UK established traders being put at a distinct disadvantage (as they are UK VAT registered, and subsequently more expensive to customers).

The implementation of the Finance Act with regard to this subject is two-fold. HMRC will now have the power to dictate if a non-established trader must appoint a jointly and severally liable UK established representative, and perhaps more tellingly, will have the power to seek lost revenue from the online platform operators.

This makes it more important than ever to be fully compliant when trading in the UK via online platforms.

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