Healey to make online marketplaces collect VAT in 1 billion pound tax crackdown, The Times reports
The Chancellor is expected to announce in his first Budget on 28 October that Amazon, eBay and Temu will be made responsible for collecting tax owed by sellers on their platforms, with the proceeds used to cut business rates for high street shops.
Online marketplaces including Amazon, eBay and Temu will for the first time be made responsible for collecting tax owed by retailers selling on their platforms, under plans The Times reported on Tuesday that the Chancellor is expected to announce.
The policy is expected to raise up to 1 billion pounds for the Treasury by cracking down on mainly foreign sellers who avoid paying VAT on their sales, the newspaper said. John Healey is expected to announce that the revenue will be used to cut business rates for high street shops.
Under the new rules, marketplaces would be required to collect VAT at source for business sellers with an annual turnover of more than 90,000 pounds. Amazon, which already collects VAT from foreign sellers, welcomed the proposal and estimated the change could raise about 700 million pounds for the Treasury, according to The Times. There is no suggestion of wrongdoing by the marketplaces themselves.
Closing this loophole will raise significant revenue for the exchequer.Amazon spokesman, quoted by The Times
Concern has grown in government about overseas retailers using online marketplaces to undercut British competitors by evading the 20 per cent VAT charged on sales. The Times reported that in the past few years tens of thousands of UK shell companies have been set up to get VAT numbers, only to be shut down before payment of VAT was demanded.
Critics of the plan called on the Treasury to go further. Dan Neidle, the founder of Tax Policy Associates, welcomed the tightening of the rules but said the Treasury needed to go further and warned the system could still be exploited. Richard Allen, head of the campaign group Retailers Against VAT Abuse Schemes, said the government had been too slow to act.
The measure forms part of the run-up to Healey's first Budget, on 28 October. During the Makerfield by-election, Andy Burnham pledged to raise the business rates threshold so that 140,000 small high street retailers would be taken out of the tax altogether, at a cost of about 880 million pounds. Retail executives who met Healey and Burnham in Downing Street urged them against a warehouse tax on larger retailers, and ministers are understood to have looked at such plans and rejected them. Stuart Machin, the chief executive of Marks and Spencer, said the sector already paid a disproportionate share of business rates.
The Treasury declined to comment on the report, saying decisions on tax are a matter for the Chancellor to set out at fiscal events. Healey, who took office in July, said in June that Britain will scrap customs duty relief on low-value imports from October 2028, a change aimed at a loophole benefiting online retailers such as Shein.
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