HMRC letter campaign targets traders on online marketplaces

HMRC letter campaign targets traders on online marketplaces

Feb 2, 2024

HMRC is targeting overseas traders on online marketplaces operating in the UK without establishment status to ensure they are paying the correct VAT

The Chartered Institute of Taxation (CIOT) confirmed that HMRC updated stakeholders at the ‘One to Many’ engagement forum about the upcoming campaign for which letters are about to start being issued.

The letter is asking for verification of the place of establishment status of businesses selling via online marketplaces.

HMRC will shortly be writing to businesses registered at agent or serviced office addresses asking them to provide evidence they are established in the UK.

The letter campaign is part of HMRC’s ongoing work to ensure overseas traders operating through online marketplaces cannot undercut legitimate traders by not paying VAT.

Businesses should start receiving campaign letters from around 22 January.

HMRC is only looking for a response where customers receiving the letter believe that they do have a UK establishment. Those who agree they are non-established do not need to respond.

HMRC defines UK establishment as a business that makes essential management decisions and carries out its main administration in the UK, has a permanent physical presence in the UK, with human and technical resources to make or receive taxable supplies. UK incorporation does not automatically provide UK establishment status.

Due to statutory review time limits HMRC is allowing 30 days to respond, which can be extended on a case by case basis upon request.