UK proposes extending marketplace VAT collection to domestic sellers

The proposed extension concerns goods located in the UK when sold to consumers through a marketplace. Platforms would collect VAT on qualifying sales by UK VAT-registered businesses and by other UK businesses meeting an annual platform-sales threshold. This is a proposed change in collection responsibility, not a newly operative VAT charge.^[1]

The Treasury factsheet describes a £90,000 annual threshold, applied separately to sales on each platform. VAT registration is a separate route into the proposed rules: a registered seller’s qualifying platform sales would be covered without relying on that threshold. The announcement does not change businesses’ existing VAT registration obligations.^[2]

Personal sales, second-hand goods and business-to-business transactions are excluded from the announced extension. Groups therefore need to distinguish seller status, customer type and the goods concerned. A UK establishment or marketplace account alone does not establish that every sale falls within the measure.^[1][2]

The impact note identifies the existing framework in the Value Added Tax Act 1994, including sections 5A, 5B, 7AA and 77E, Group 21 of Schedule 8 and Schedule 9ZC. Secondary legislation is still to specify the threshold’s level and operation, second-hand-goods treatment, implementation date and other details. October 2027 is the intended timetable, not a confirmed day-specific commencement.^[1]

HMRC expects marketplaces to review listings, update software and collect and remit VAT on in-scope transactions. Sellers may need accounting and cash-flow changes, with detailed guidance promised before implementation. Preparation should remain conditional on the final rules: this announcement does not establish a new return, registration or payment deadline.^[1][2]