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Charging VAT when goods are sold if you're an online marketplace operator

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Charging VAT when goods are sold if you're an online marketplace operator

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Find out how to work out what VAT to charge when goods are sold if you’re an online marketplace operator.

As an online marketplace operator you may need to charge VAT on sales of goods you facilitate.

This depends on:

  • where the goods are at the point of sale
  • the place of establishment of the seller
  • the value of the consignment they are imported in

Online marketplaces

An online marketplace is a business using a website or mobile phone app (such as a platform or portal), that allows third parties to offer goods for sale to customers and which is involved in all of the following:

  • setting any terms or conditions on the sale of the goods to the customer
  • processing or enabling customer payments
  • ordering or delivery of the goods

A business is not an online marketplace if it only provides one of these services:

  • processing of payments for the sale of the goods to the customer
  • listing or advertisement of goods
  • redirection or transferring of customers to other websites or mobile phone apps where goods are offered for sale, without any further involvement in any sale that might take place on that website or app

Check if the goods are being sold by an overseas seller or a seller established in the UK for VAT purposes

The seller is an overseas seller if they do not have a business establishment in the UK and they sell goods to customers in the UK.

A UK business establishment is a place where either the:

  • essential management decisions and business’s central administration is carried out at a location in the UK
  • business has a permanent physical presence with the human and technical resources to make or receive taxable sales in the UK

A registered, serviced or virtual office is not enough to create a business establishment.

Goods in the UK at the point of sale

You will be liable for VAT on goods sold by overseas sellers and need to charge this when the goods are sold.

If the seller is established in the UK, they will be liable for VAT.

To charge and account for VAT you will need to:

  • know the precise nature of the goods to find out the correct rate of VAT to charge
  • register for VATin the UK
  • keep records of the goods sold, and make sure they get accurate information to apply the correct VAT treatment to the goods

You will be held liable for under-declared VAT if you cannot show you have taken reasonable steps to make sure the correct VAT was charged.

Where the goods are located in Northern Ireland at the point of sale and sold to a customer in Northern Ireland if the seller is:

  • not established in the UK or EU, you will be liable for the VAT
  • established in the UK or EU, they will be liable for any VAT due

Goods sold to UK VAT-registered businesses

You should pass on all the details of the sale (which should include the VAT registration number of the business) to the seller. The seller will need to charge and account for any VAT due.

Goods that are outside of the UK at the point of sale

You must work out the consignment value of the goods by deciding their ‘intrinsic value’, this is the price the goods were sold for, not including:

  • transport or insurance costs, unless they are included in the price and not separately shown on the invoice
  • other identifiable taxes and charges

You must add the individual values of all items in a consignment together to get the total value of the consignment, unless sent individually.

Consignments valued at £135 or less

You will be liable for VAT and need to charge this when the goods are sold.

To charge and account for VAT you will need to:

  • know the precise nature of the goods to find out the correct rate of VAT to charge
  • register for VAT in the UK
  • keep records of the goods sold, and make sure you get accurate information to apply the correct VAT treatment to the goods

You will be held liable for under-declared VAT if you cannot show you have taken reasonable steps to make sure the correct VAT was charged.

Goods sold to UK VAT-registered businesses

You will not need to charge and account for VAT if the customer is a VAT registered business. The VAT registered business customer will be required to account for any VAT due instead.

gov.uk

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