This consultation concerns online marketplaces (OMPs) and UK businesses using them to sell goods and generate business income. It includes takeaway food delivery platforms, restaurants, fast food kitchens, and takeaway outlets using those platforms.

Views are also welcome from private non-business sellers (though they are outside the scope of proposed changes) and UK consumers interested in simplicity and fairness in VAT rules, particularly for levelling the playing field for compliant sellers.

Duration: 8 weeks, from 23 June 2026 to 18 August 2026.

Lead Officials: Joint HMRC/HMT consultation.

How to Respond: Use the online form. Email enquiries/responses to: consultationonlinemarketplaceliability@hmrc.gov.uk.

Post: Consultation Online Marketplace Liability, HMRC, 14 Westfield Avenue, Stratford, London E20 1HZ.

Additional engagement (roundtables etc.) available via the email address. Responses will inform policy; a summary will be published. If changes proceed, a technical consultation on draft legislation will follow.

Previous engagement informed initial design.

The tax system must promote a level playing field. Non-compliant businesses should not undercut compliant ones. The 2021 OMPL rules successfully increased VAT collection from overseas sellers on marketplaces, but non-compliance continues among both overseas and domestic sellers. Online sales are now 28% of retail.

The proposal extends OMP liability to domestic sellers to tackle evasion, support high streets, and redirect revenue to business rates improvements for pubs, restaurants, hotels, and other high street businesses.

Executive Summary

The 2021 reforms improved compliance for overseas sellers but gaps remain for both overseas and UK businesses, distorting competition against compliant online and high street businesses.

Objectives: Tackle non-compliance, protect non-VAT-registered businesses, raise revenue for high street business rates relief, and ensure workable/fair rules.

Proposal: Extend OMPL to UK businesses’ sales on OMPs (B2C goods, including retail and takeaway food).

Two options to protect small businesses:

• Minimum Platform Threshold (MPT) based on per-platform sales.
• VAT rate relief for businesses below the VAT threshold.

Non-business sellers (e.g. individuals selling second-hand goods) remain out of scope. Views sought on second-hand goods by businesses. Consultation runs 23 June – 18 August 2026.

Introduction & Policy Problem

VAT is the UK’s third largest tax. The 2021 OMPL made marketplaces liable for VAT on B2C goods from overseas businesses (low-value imports ≤£135 and UK-located goods). It has raised >£8bn and ~£1.8bn annually.

Persistent Issues: Tens of thousands of UK and overseas businesses on OMPs fail VAT obligations, costing hundreds of millions annually. Non-compliance patterns include:

• Overseas businesses masquerading as UK-established.
• UK businesses disaggregating sales across platforms to stay under the VAT threshold.
• VAT-registered businesses under-accounting or disappearing before paying.

Online sales rose from 5% (2008) to 28% (2025) of retail. Delivered hot food shows major VAT losses.

Proposal: Extend OMPL to UK businesses’ B2C goods sales on OMPs. OMP definition (per existing legislation): facilitates online sales by third parties, sets terms, processes payments, and handles/arranges delivery.

Objectives:

• Tackle non-compliance and level the playing field (online vs high street).
• Workable for businesses (minimal admin burden).
• Fair, protecting non-VAT-registered businesses.
• Support high streets via business rates improvements using new revenue.