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HMRC Campaign Targets Online Sellers’ Place of Establishment

Published by Chirag
Posted Date: January 18, 2024 , Modified Date: April 18, 2024

HMRC is gearing up for a new campaign to verify the place of establishment for businesses selling via online marketplaces. The tax agency has informed stakeholders, including the CIOT, that letters will soon be dispatched as part of this initiative.

The campaign aims to ensure that overseas traders operating through online platforms comply with VAT regulations, preventing them from gaining an unfair advantage over legitimate traders.

Background on the Campaign

The forthcoming letter campaign, set to commence around 22 January, will specifically target businesses registered at agent or serviced office addresses.

HMRC intends to collect evidence from these businesses to confirm their establishment status in the UK.

The initiative aligns with HMRC's broader efforts to uphold tax compliance and safeguard the interests of domestic traders.

Online Sellers

Project Scope

  • The campaign letters will be sent to businesses identified by HMRC as potentially lacking UK establishment for VAT purposes.
  • HMRC's objective is to verify VAT records, ensuring accurate treatment for online marketplaces and facilitating sales for overseas-based sellers.
  • Recipients of the letter are only required to respond if they believe they have a UK establishment. Those acknowledging their non-established status do not need to reply.
  • HMRC defines a UK establishment as a business that makes essential management decisions, conducts main administration in the UK, and maintains a permanent physical presence in the country with necessary resources for taxable supplies. It emphasises that UK incorporation alone does not confer automatic UK establishment status.
  • Recognising statutory review time limits, HMRC provides a 30-day window for responses, with the option for extensions on a case-by-case basis upon request.

This initiative underscores HMRC's commitment to maintaining a level playing field for businesses operating through online marketplaces and reinforces the importance of compliance with VAT regulations.

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