Guidance

Charging VAT when goods are sold if you're an online marketplace operator

Find out how to work out what VAT to charge when goods are sold if you’re an online marketplace operator.

From:
HM Revenue & Customs
Published
8 March 2023

As an online marketplace operator you may need to charge VAT on sales of goods you facilitate.

This depends on:

  • where the goods are at the point of sale
  • the place of establishment of the seller
  • the value of the consignment they are imported in

Online marketplaces

An online marketplace is a business using a website or mobile phone app (such as a platform or portal), that allows third parties to offer goods for sale to customers and which is involved in all of the following:

  • setting any terms or conditions on the sale of the goods to the customer
  • processing or enabling customer payments
  • ordering or delivery of the goods

A business is not an online marketplace if it only provides one of these services:

  • processing of payments for the sale of the goods to the customer
  • listing or advertisement of goods
  • redirection or transferring of customers to other websites or mobile phone apps where goods are offered for sale, without any further involvement in any sale that might take place on that website or app

Check if the goods are being sold by an overseas seller or a seller established in the UK for VAT purposes

The seller is an overseas seller if they do not have a business establishment in the UK and they sell goods to customers in the UK.

A UK business establishment is a place where either the:

  • essential management decisions and business’s central administration is carried out at a location in the UK
  • business has a permanent physical presence with the human and technical resources to make or receive taxable sales in the UK

A registered, serviced or virtual office is not enough to create a business establishment.

Goods in the UK at the point of sale

You will be liable for VAT on goods sold by overseas sellers and need to charge this when the goods are sold.

If the seller is established in the UK, they will be liable for VAT.

To charge and account for VAT you will need to:

You will be held liable for under-declared VAT if you cannot show you have taken reasonable steps to make sure the correct VAT was charged.

Where the goods are located in Northern Ireland at the point of sale and sold to a customer in Northern Ireland if the seller is:

  • not established in the UK or EU, you will be liable for the VAT
  • established in the UK or EU, they will be liable for any VAT due

Goods sold to UK VAT-registered businesses

You should pass on all the details of the sale (which should include the VAT registration number of the business) to the seller. The seller will need to charge and account for any VAT due.

Goods that are outside of the UK at the point of sale

You must work out the consignment value of the goods by deciding their ‘intrinsic value’, this is the price the goods were sold for, not including:

  • transport or insurance costs, unless they are included in the price and not separately shown on the invoice
  • other identifiable taxes and charges

You must add the individual values of all items in a consignment together to get the total value of the consignment, unless sent individually.

Consignments valued at £135 or less

You will be liable for VAT and need to charge this when the goods are sold.

To charge and account for VAT you will need to:

You will be held liable for under-declared VAT if you cannot show you have taken reasonable steps to make sure the correct VAT was charged.

Goods sold to UK VAT-registered businesses

You will not need to charge and account for VAT if the customer is a VAT registered business. The VAT registered business customer will be required to account for any VAT due instead.

You should:

  1. Ask for their VAT number.

  2. Confirm it is correct — use the check a VAT number online service.

  3. Add a note to the invoice (for example, by writing ‘reverse charge: customer to account for VAT to HMRC’).

  4. Send it to the business customer.

VAT-registered businesses receiving goods bought on an online marketplace

If the goods are sold to a business customer in Great Britain, the business receiving goods should account for the VAT on their VAT return using a ‘reverse charge’ procedure.

If the goods are sold to a business customer in Northern Ireland from outside the EU, the business receiving goods may account for it using postponed VAT accounting or any other means of paying import VAT.

Wherever the goods are sold to the business customer they will be able to recover the VAT as input tax on the same VAT Return subject to the normal recovery rules.

Consignments valued at more than £135

If the total value of the consignment is more than £135, normal import VAT and customs rules will apply.

If the seller makes changes to the consignment so that its total value goes above £135 the consignment may be subject to import VAT and Customs Duty, and you may have to adjust the VAT already accounted for at the point of sale.

After you’ve registered for VAT

VAT invoices

The normal rules for the content and format of VAT invoices will apply.

You must issue a paper or digital VAT invoice to customers as specified in the VAT guide.

For goods sold in Northern Ireland from outside of the EU, you do not need to provide a VAT invoice.

VAT records

You must keep full records (including VAT invoices) for 6 years from the date any goods are sold.

Find out more about VAT record keeping.

Compliance checks

HMRC carries out compliance checks to:

  • make sure you’re paying the right amount of tax at the right time
  • make sure you’re getting the right allowances and tax reliefs
  • prevent tax evasion
  • make sure the tax system is operating fairly

Updates to this page

Published 8 March 2023

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