The Federation of Small Businesses (FSB) has welcomed the Government’s preferred approach to tackling VAT non-compliance in the online marketplace sector, saying it strikes the right balance between closing a tax loophole and protecting small businesses.
HMRC has published a consultation on extending online marketplace liability for VAT compliance. Under the Government’s preferred option, businesses with annual sales below the £90,000 VAT threshold would be excluded from the new requirements.
Craig Beaumont, Executive Director at the FSB, said: “The Government’s preferred option for collecting VAT from sales on online platforms is the best option if taking this kind of approach. Businesses with sales of under £90,000 per year will be excluded. We hope that this will strike the right balance between addressing a tax loophole and protecting small businesses.”
Beaumont added: “Independent retailers and online entrepreneurs below the £90,000 VAT threshold are protected from significant red tape, and this must be maintained as ever more commerce happens online. We believe the Government’s preferred proposal will protect this group, and are pleased to see this approach being taken.”
The consultation forms part of the Government’s broader effort to ensure that VAT is collected fairly across digital commerce. Online marketplaces have faced increasing scrutiny over the role they play in facilitating VAT non-compliance by overseas sellers operating on their platforms.
The FSB has consistently argued that any new compliance framework must avoid creating disproportionate burdens for the smallest traders, who rely on online platforms as a primary route to market. The organisation says it will continue to engage with the consultation process to ensure small business interests are represented.
