VAT underpayments by overseas online sellers

KEY POINTS

• VAT non-payment from online trading by sellers based outside the EU is estimated to be up to £1.5bn.
• HMRC is unsure of the reason for non-payment.
• Some sellers use fulfilment houses in the UK to allow the transit of undervalued or misclassified goods.
• HMRC is raising awareness in collaboration with online marketplaces.
• Enforcement strategy is inland rather than at the border.
• HMRC is focusing its powers on civil enforcement.

Concerns that online sellers based outside the European Union are not charging VAT on their goods sold to UK customers appear to be vindicated in findings from the National Audit Office (see Investigation into overseas Sellers failing to charge VAT on online sales at here).

This report comes at a time when HMRC is focusing its priority...