UK: VAT Responsibility Could Shift to Online Marketplaces for UK Sellers

The UK is considering making online marketplaces responsible for VAT on more B2C sales made by UK businesses. The proposal could affect e-commerce sellers, takeaway businesses and platforms, but no new rules have yet been adopted.

The UK Government is considering extending existing online marketplace VAT liability rules so that platforms, rather than UK sellers, would account for VAT on certain B2C sales made through their marketplaces.

The Tax Authority (HMRC) and HM Treasury published the consultation on June 23, 2026. It closed on August 18, 2026, and the Government is now considering the responses. No change has yet been implemented, meaning UK sellers and online marketplaces must continue applying the existing VAT rules for now.

The proposal is directly relevant to e-commerce marketplaces and UK businesses selling goods through them. It could also cover online takeaway food delivery platforms and the restaurants, fast-food businesses and takeaway outlets using those services.

Since 2021, online marketplaces have been responsible for VAT on certain B2C sales involving overseas sellers. This includes goods located in the UK at the point of sale when they are sold by an overseas business, as well as certain imported consignments valued at £135 (~EUR 157) or less.

For goods already located in the UK, the position is currently different when the seller is established in the UK: the UK seller remains responsible for VAT.

The Government proposes extending marketplace liability to UK-based businesses selling goods located in the UK at the point of sale. Under that model, the online marketplace would account for VAT on qualifying B2C sales instead of the underlying seller. The proposal includes ordinary retail goods and could also cover restaurant and takeaway food sold through online delivery marketplaces.

For a VAT-registered seller, the Tax Authority currently envisages a deemed zero-rated supply from the business to the marketplace. The marketplace would then apply the correct VAT rate to the sale to the final consumer and report that VAT through its own VAT return.

The change would apply only to sales made through qualifying marketplaces. Sales through a retailer's own website or physical stores would continue to follow the normal VAT rules, and the business would remain responsible for VAT on those transactions.

The Government's lead proposal is a Minimum Platform Threshold, with £90,000 (~EUR 105,700) suggested as the main option.

Under this approach, marketplace VAT liability would apply only once a UK business's sales through an individual platform exceed £90,000. The amount broadly corresponds to the current UK VAT registration threshold.

The important distinction is that the platform threshold and the normal VAT registration threshold would serve different purposes.

The Minimum Platform Threshold would look at sales made through an individual marketplace to determine whether that marketplace becomes responsible for VAT. The normal VAT registration threshold, by contrast, continues to look at the business's relevant taxable turnover across its activities.

A retailer could therefore have sales below £90,000 on each of several marketplaces while its total taxable turnover exceeds the VAT registration threshold. In that situation, spreading sales across different platforms would not remove the business's normal VAT registration obligations.

Impact on retailers and online marketplaces

For retailers, the central change would be the separation of who makes the commercial sale from who accounts for the VAT. The underlying UK business would continue selling its goods through the platform, but the marketplace could become responsible for calculating, collecting and reporting VAT on qualifying consumer sales.

This distinction will matter for VAT reporting and reconciliation between marketplace transaction data, settlement reports, accounting systems and the retailer's own VAT return.

From a retail compliance perspective, businesses should not interpret the proposal as transferring all VAT obligations to marketplaces. Sellers would remain responsible for transactions through other channels and would still need to assess their overall VAT registration position.

What should marketplaces and sellers do now?

No system or VAT-reporting change is required solely because of the consultation. Businesses should continue following the current rules until legislation is adopted.

Online marketplaces should nevertheless assess whether their systems could identify UK-established business sellers, track sales against a possible platform threshold, determine the VAT treatment of goods and correctly transfer VAT data into reporting and settlement processes.

UK retailers, restaurants and other businesses selling through marketplaces should review how much turnover passes through each platform and how marketplace sales are currently reconciled with their accounting and VAT records.

The Government will publish a formal response after considering consultation submissions. If it decides to proceed, HMRC has confirmed that a technical consultation on draft legislation will follow before the rules are introduced.

The principal official source is the HMRC and HM Treasury consultation “Extending VAT online marketplace liability to combat non-compliance,” published on June 23, 2026. Source

Ivana Picajkić, Medior Legal Consultant at Fiscal Solutions

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