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Online Market Places Agreement

There is a general expectation that on online marketplaces should ‘play a wider role in ensuring their users are compliant with the tax rules’ (Policy paper: Autumn Budget 2017).

The Public Accounts Committee also recommended putting in place an agreement that sets out collaborative working arrangements between HMRC and online marketplaces.

The agreement would aim to formalise a relationship between HMRC and online marketplaces to ensure VAT compliance by users of the marketplaces .

The Agreement seeks to place certain obligations on the online Market Places in addition to the legal obligations placed on such online marketplaces by UK VAT legislation such as sections 77B, 77BA and 77C-77E of the VAT Act 1994.

By signing the agreement, all online marketplaces agree to provide, upon request from HMRC, data to assist HMRC in tackling VAT fraud and error. The agreement will place a duty on the online marketplace to find a mechanism for delivering the in a manner which adheres to the law.

The data should, at the bare minimum, allow HMRC to:

· ‘Identify individual business sellers

· calculate the value and volume of UK sales of individual businesses over a prescribed period (eg, one year)

· contact the individual business directly’

The online market places will also be responsible for educating the sellers about their VAT obligations in the UK. This is to include UK and EU sellers as well as non-EU sellers. This can be done by providing the sellers information or by directing them to HMRC guidance.

The marketplaces would also agree to provide the information requested in a prompt fashion when HMRC indicate that sellers are using their marketplace in breach of UK VAT legislation obligations.

The online marketplace will also take appropriate steps when HMRC indicate that a seller is not adhering to their VAT obligations.

‘For example:

· include a request for the VAT registration number from the relevant business within the account opening process

· where evidence of potential non-compliance with registration requirements is presented, contact the seller directly to clarify the position within 30 days

· where the concern about non-compliance with UK VAT registration obligations persists, to implement appropriate sanctions up to and including restricting the seller from selling on the UK marketplace or removing it’

The online market place must also inform HMRC if they decide to remove or restrict a seller from their market place on the basis of non-compliance with VAT regulations.

HMRC acknowledges that the 30-day clarification period mentioned above is separate from the statutory periods set out in sections 77BA and 77E of the VAT Act 1994 which carry precedence.

Notifications to HMRC can be sent by email to

Requests for data to online marketplaces by HMRC will be made on a case by case and on a risk basis. In all cases where it receives information about sellers from online marketplaces, HMRC will respect the ‘commercial-in-confidence’ status of information subject always to any overriding legal obligation.

HMRC acknowledges the need to maintain a level playing field between online marketplaces and will ensure that this agreement is made available to all online marketplaces.

HMRC will publish the list of all online marketplaces that sign up to this agreement. In the event that a signatory does not comply with this agreement HMRC will remove them from the list. This includes failing to identify a legally compliant way of providing data to HMRC when requested.


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