Finance (No.2) Bill

Further written evidence submitted by the Institute of Chartered Accountants of England and Wales (ICAEW) (FB07) Finance (No.2) Bill 2017-19 Clause 38
Value Added Tax - Online Marketplaces

Submission by ICAEW on 22 December 2017 to House of Commons Public Bill Committee in response to invitation dated 14 December 2017 to "have your say"


1. Please see Appendix 1.


2. Clause 38 deals with joint and several liability of operators of online marketplaces and the requirement for operators of online marketplaces to display valid VAT numbers.


3. We are concerned that the proposed UK VAT treatment of online marketplaces may not provide an adequate solution to the problem that it seeks to address and could create double taxation when combined with the latest proposals from the EU.

4. It may not work because many of the small online marketplaces are not based in the UK or EU. It is unclear how UK VAT collection could be enforced by HMRC in relation to online sales to UK customers through overseas marketplaces.

5. The proposed legislation could create double taxation if a marketplace became liable for VAT under both the proposed article 14a of the Principal VAT Directive and the proposed section 77BA of the VAT Act 1994.


6. We accept that the UK does not want to wait until the amendments to the Principal VAT Directive take effect in 2021, but recommend that there should not be two fundamental changes to the VAT treatment of sales made through online marketplaces in such a short period of time.

7. We believe that the EU approach of treating supplies being made to and by the marketplace represents a better solution in the longer term. We suggest that the UK seeks a derogation to implement these proposals from an earlier date than currently permitted under EU law. Alternatively, any changes could be implemented with effect from 1 April 2019, by which date we do not expect that a derogation will be required.


8. The proposed article 14a to the Principal VAT Directive reads as follows:

‘Where a taxable person facilitates, through the use of an electronic interface such as a marketplace, platform, portal or similar means, distance sales of goods imported from third territories or third countries in consignments of an intrinsic value not exceeding EUR 150, that taxable person shall be deemed to have received and supplied those goods himself.

‘Where a taxable person facilitates, through the use of an electronic interface such as a marketplace, platform, portal or similar means, the supply of goods within the Community by a taxable person not established within the Community to a non-taxable person, the taxable person who facilitates the supply shall be deemed to have received and supplied those goods himself.’.

9. A similar amendment to the VAT Act 1994 could achieve a similar result and provide consistency in VAT treatment for online marketplaces before and after Brexit.


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December 2017


Prepared 10th January 2018