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accounting may apply. • Supply is not to a VAT-registered business (Business to
consumer).
As indicated by HMRC, the FOB method of valuation will be
applied to determine whether the £135 threshold is met or not In this circumstance, UK VAT will be due at the time the sale
- meaning that the taxable value shall be based on the ‘intrinsic of goods takes place as it is now, but the significant change here
value’ of the goods, which equates to the price at which the is that the OMP will be deemed as the supplier and so liable to
goods are sold, excluding transport and insurance costs, unless account for the VAT on sales facilitated through its marketplace.
they are included in the price and not separately indicated on the This means that for VAT purposes, the seller, operating through
invoice, as well as any other taxes and charges identifiable by the an OMP, will no longer be making a supply to consumers in the
customs authorities from any relevant documents. UK.

It is important to bear in mind that the £135 threshold applies Whether the sale is to a ‘UK customer’ will be determined by
to the overall value of the consignment, not to each individual whether the final customer’s delivery address for the goods is in
item within the consignment. the UK, irrespective of the customer’s billing address.

HMRC has pointed out that: “To determine the correct VAT The goods will already have been imported into the GB from
treatment you will need to know whether the goods are to be outside the UK, and existing VAT and duty obligations will
packaged and sent singularly to the customer or as part of a apply at importation.
consignment with other goods.
At the point the goods are sold to the customer, the overseas
If the latter applies then it is the overall value of the seller will be deemed as making a zero-rated supply of the goods
consignment that must be considered, and if this is over £135 to the OMP. This is so that the overseas seller will be eligible to
then normal VAT and customs rules will apply, meaning that register for VAT in the UK and reclaim any import VAT it has
import VAT will be chargeable and so supply VAT should not be incurred in the course of importing the goods, subject to the
charged at the point of sale.” [1] normal rules for VAT deduction.

The person liable to account for the VAT will be required Marketplaces will NOT be liable for any VAT on business-
to provide the customer with a VAT invoice at the point of to-business sales of goods. The business recipient will need to
sale - this obligation will fall on either the seller (for sales not provide a valid UK VAT registration number to show that the
facilitated by an OMP) or the OMP, where it is facilitating the supply is a business to business sale.
sale and so acting as a deemed supplier for VAT purposes.
As opposed to what already happens in France, Spain and Italy,
Exception: the below types of consignment fall outside the scope there will be no VAT reverse charge applied to B2B domestic
of the new arrangements: sales of goods made by non-established taxpayers, inside or
outside an OMPs, when the goods are already in the UK at the
• Non-commercial consignments, such as gifts (gift relief for moment of sale.
consignments valued up to £39 will remain);
• Consignments containing any goods that are subject to For sales by non-established sellers that are not facilitated by
excise duty (e.g. alcohol products); an OMP, where the goods are located in the UK at the point
• Consignments from Jersey and Guernsey that are covered of sale, the existing rules remain unchanged, such as the seller
by the Import VAT Accounting Scheme. remaining liable to register and account for VAT on all such
sales to UK customers.
Furthermore, the new scheme will not apply in the case where
the recipient is a VAT-registered business in the UK who As reminded by HMRC, there is no VAT registration threshold
provides the merchant or the OMP with a valid UK VAT for businesses not established in the UK, so the seller is liable to
number. In that case, a reverse charge will apply. register an account for VAT as soon as it starts making sales or
holds any stock for sale in the UK.
Domestic consumer distance selling facilitated by online
marketplaces (OMPs) What is an online marketplace for VAT purpose?
A different treatment concerns the case when: According to HRMC, the term OMP describes any electronic
interface (website or mobile application) such as a marketplace,
• Goods are owned by a seller who is based outside the UK; platform, portal or similar that facilitates the sale of goods to
and customers.
• Goods are located in the UK at the point of sale; and
• The seller sells the goods to a customer in the UK through A business will not be classified as an OMP facilitating a supply
an online marketplace; and furthermore of goods if all the following conditions are met:

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