UK’s Healey cracks down on VAT-shirking online sellers
Move to close a loophole brings Britain closer to approaches adopted in Switzerland.
UK Chancellor John Healey announced plans to tackle a VAT avoidance loophole exploited by online sellers from overseas. Speaking in the budget, Healey pledged to strengthen requirements for online marketplaces to ensure all retailers, not just those from abroad, are responsible for collecting VAT on sales over £90,000. From October 2027, marketplaces like Amazon, eBay, and Temu will be tasked with collecting the tax owed by domestic sellers who had previously registered as U.K. based companies to evade payment.
The government plans to reinvest the revenue saved into high street businesses by reducing business rates. In response to retailer pressure, the government ran an eight-week consultation on the proposal. Amazon estimated that up to £3.2 billion worth of sales are made by VAT-shirking sellers across U.K. online platforms, costing the Treasury significant revenue each year.
The move aligns Britain with Switzerland's approach and leads to the European Commission reviewing its marketplace VAT collection rules. Amazon's director of U.K. public policy, Monica Ariño, welcomed the change, emphasizing the aim to level the playing field for small businesses selling on Amazon. The story has been updated since its initial release.
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