If you are trading commercially online, your cost of listing goods on Ebay will soon increase by 20%.
E-commerce business eBay has started charging VAT at 20% on its fees to businesses trading in the UK in line with HMRC’s continued tougher stance against online traders.
The business has undergone a restructure so that, instead of contracting with eBay Europe Sarl, the Luxembourg entity, business customers are now contracting with eBay (UK) Ltd.
The change follows measures introduced last year by the chancellor, aimed at tackling the increase in VAT evasion by overseas traders that sell goods in the UK through online marketplaces such as eBay and Amazon.
HMRC was given the power to force these marketplaces to ensure that their overseas customers were registered and accounting for VAT or risk being liable for the tax themselves.
If an overseas retailer does not comply, HMRC will issue a direction to the online marketplace notifying that it will be jointly liable for the VAT on future sales made by that retailer if it continues using the online marketplace.
It is expected that these new measures will secure a much needed additional £875m of VAT revenue by 2021.
If you are an online trader or considering embarking on an E-Commerce venture, call us today to discuss how we can help you structure and operate in full compliance with UK law.