A US-based seller recently attempted to do the right thing by ensuring VAT compliance when selling to UK customers. As a Non-Established Taxable Person (NETP)—a business with no UK presence but VAT obligations—they had properly registered for UK VAT, listing Ruby House in Aberdeen as their official VAT registration address (HMRC’s designated address for NETPs).
Under current VAT rules, the online marketplace (OMP) facilitating the sales is responsible for collecting and remitting VAT on behalf of overseas sellers. However, the marketplace in question—a major global platform—has refused to engage with the seller about VAT collection. Frustrated by the lack of response, the seller reported the issue directly to HMRC, expecting enforcement action.
Instead of investigating the matter, HMRC’s response was dismissive:
"I understand from your complaint that [VERY BIG MARKETPLACE] have not been charging your customers VAT and have not allowed you to sell on their platform with your VAT number, XXX XXXX XXX registered to the Ruby House address with Aberdeen.
Unfortunately, we cannot get involved in any disagreement you may have with a third party. Instead, any such dispute should be treated as a civil matter, for which you may wish to seek legal advice."
This response is staggering. Online Marketplaces collecting VAT is one of the most significant and effective reforms in tackling VAT evasion, yet here we have a clear case of non-compliance—and HMRC is washing its hands of the issue. If Marketplaces refuse to charge VAT and sellers report them, who exactly is responsible for enforcement?
This exchange raises serious concerns about the effectiveness of HMRC’s approach. When honest businesses take the initiative to comply and alert authorities to wrongdoing, they are met with bureaucratic indifference. If the UK government is serious about tackling VAT fraud, this attitude must change.
HMRC, do your job!
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