The UK will be targeting the digital economy for tax revenue for the first time – but what does it mean for online sellers?
At yesterday’s budget, Chancellor Phillip Hammond was eager to defend the UK’s small- and medium-sized brick and mortar businesses from what’s likely to be a steep rise in business rates tax for companies clustered in the South-East. The rise in business rates is a direct impact of the revaluation of property prices from 2010, a factor that online-only businesses won’t have to contend with. As such, Hammond looks to redress the balance with a tax specifically facing online firms. While this may appear daunting for online sellers, Craig Agutter, our Head of Ecommerce EMEA, explains why this may not actually be the case:
“The latest indications from the Chancellor that the Exchequer is considering high-tech ‘split payment’ solutions for B2C Ecommerce VAT collection appears to be a boon for online sellers by automating tax compliance and potentially reducing associated costs. This could place a greater burden on online marketplaces themselves, such as Amazon, who have faced calls in recent years to do more to ensure that sellers based overseas using these platforms are VAT registered.
Depending on the outcome of the public consultation on the digital tax-collection measures, the VAT due to HMRC may be paid at the point of sale instead of requiring retailers to pay the aggregate VAT due post-sale. This may be welcome news for all VAT-compliant UK-based sellers out there and spell the beginning of the end for non-compliant sellers enjoying an unfair advantage when competing for UK consumers’ online purchases. If successfully implemented, it will be interesting to see if other European countries follow suit.”
While the Government’s not committed to any model or structure as yet, international marketplaces will be closely watching the outcome of the deliberations – while it could result in more admin for marketplaces, you could find yourself operating in a more level playing field with overseas sellers when selling here in the UK.
Further reading:
New year, new ecommerce markets…new tax obligations?