HMRC issues VAT guidance to help overseas sellers

Steps have been taken to simplify VAT guidance for overseas sellers that sell goods online into the United Kingdom to help reduce the tax gap.

The guidance published by HMRC, Selling goods using an online marketplace or direct to customers in the UK, has also been translated into simplified Mandarin to support sellers exporting goods from China to comply with UK import and VAT regulations.

In 2022, the UK imported £83.3 billion in goods and services from China and Hong Kong. Online shopping accounted for 26.5 per cent of all UK retail sales in 2022, with a substantial number of goods being bought from international sellers via online marketplaces.

Marc Gill, HMRC’s Director for Individuals and Small Business Compliance, said: “We have been working closely with international partners to better understand what information overseas sellers need in order to comply with their UK tax obligations.”

HMRC is encouraging UK agents and shipping companies to share the simplified guidance with their customers.

The information explains when and how VAT and import duties must be charged to customers by international sellers. It explains the different processes for direct to customer sales, and for sellers using online marketplaces.

“We have acted on feedback from businesses to simplify and compile this online guidance into one, easily accessible place on GOV.UK. We have also recently published a simplified Mandarin translation of our guidance following research conducted with Chinese businesses.

“By making our VAT and import duty rules easier to understand, we will be able to increase tax compliance levels for online sellers. We are asking UK freight, customs and shipping agents to help us reduce the tax gap by sharing this simplified guidance with their customers. By working together, we can help everyone pay the right amount of tax at the right time.”

HMRC’s updated guidance has been published following detailed consultation and research with overseas sellers and brings together all relevant guidance in one place on GOV.UK. By making the process clearer and easier to follow, it will support overseas sellers to comply with their tax obligations and help HMRC to reduce the tax gap.

In 2018, HMRC signed an updated Memorandum of Understanding (MOU) with the General Administration of Customs China (GACC). During the 10th UK-China Economic and Financial Dialogue in 2019, HMRC agreed to provide Chinese businesses with appropriate tax and customs guidance.

In 2020, HMRC commissioned research with Chinese online sellers. The report, Knowledge and attitudes of online sellers in China to UK tax compliance, was published in 2021. Recommendations from that research led to the development of new guidance and its translation into simplified Mandarin.

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