HMRC has announced an agreement to tackle VAT fraud on online marketplace platforms, encouraging all online marketplaces operating in the UK to sign up to promote VAT compliance.
The agreement comes after estimates released by HMRC put the amount of tax loss from VAT fraud and error on online marketplaces between £1bn-£1.5bn in 2016 and 2017.
Under joint and several liability (JSL) rules, which received Royal Assent in 2016, HMRC already has the power to hold online marketplaces to account for VAT fraud committed by sellers on their platforms. Since the rules became effective, HMRC has opened 2,100 investigations into non-compliant businesses overseas and has seen applications to register for VAT rise to 27,550 between March 2016 to January 2018, compared to just 1,650 in 2015.
The tax authority said that by signing the new agreement, platforms had a responsibility to “ensure their sellers understand tax rules and prevent fraud from happening on their watch”.
The agreement commits platforms to educating online sellers from the UK and beyond about their VAT obligations in the UK. This can be achieved by either providing their own guidance or directing sellers to guidance offered by HMRC.
Platforms will also be expected by HMRC to respond “swiftly” if they receive notification from the tax authority that sellers are not complying with VAT rules. Platforms will also be tasked with implementing systems through which appropriate action can be taken in such cases.
In addition, HMRC has asked that platforms provide information about their sellers – in line with legal regulations – on request from the tax authority.
Once signed up to the agreement, platforms will be added to a published list of signatories. If platforms fail to meet their commitments, they face removal from the list.
Read More at: https://www.accountancyage.com/2018/04/26/hmrcs-vat-fraud-agreement-how-has-the-accountancy-industry-responded/