UK launched consultation on split VAT payment system
The UK government recently launched a consultation on the use of split VAT payment system in the e-commerce industry.
4 April, 2017
The split payment mechanism consists on the customer paying the VAT portion directly to the tax authorities, instead of the usual scheme where the supplier collects this VAT amount from the customer and pays them to the authorities as part of the VAT return calculation.
The proposed mechanism would apply in B2C online sales made by foreign businesses to UK individuals. These customers would pay VAT on their online purchases directly to HMRC. Based on other initiatives in this industry, we would expect split payments to be required only on sales made by foreign non-EU companies selling their goods in the UK.
VAT fraud in the online industry has been subject to multiple initiatives such as requiring a fiscal representative when registering as a foreign non-EU online business or extending the liability of the VAT payment to online platforms such as Amazon or Ebay, hence making them responsible for any VAT payment missed by their users.
Thre results of the consultation on the use of split VAT payment system in the e-commerce industry are published on the site of HMRC.