John Healey ‘targets tax crackdown on online marketplaces’ in first budget
John Healey is reportedly preparing a budget measure requiring online marketplaces such as Amazon and eBay to collect VAT from retailers selling through their platforms. The proposal could raise up to £1bn and is intended to help fund business rates cuts for high street shops.
Currently, marketplaces collect VAT for overseas businesses selling into the UK, but some sellers reportedly avoid the rules by posing as UK retailers. Under the proposed change, platforms would collect VAT at source from sellers with annual turnover above £90,000, wherever they are based. The government has also consulted food delivery platforms; Amazon welcomed closing the loophole, while the Treasury said tax decisions would be announced at fiscal events.
- Marketplaces could collect VAT for more sellers.
- The measure may raise up to £1bn.
- Revenue could help fund high street business rates cuts.
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Online marketplaces such as Amazon and eBay let independent retailers sell goods to shoppers through their websites. VAT is a tax on many goods and services, and sellers whose taxable turnover passes a set threshold must register and account for it.
Marketplaces already collect VAT on sales by overseas businesses to UK customers, but the reported concern is that some sellers have avoided this by presenting themselves as UK-based. The proposal would make platforms collect VAT from qualifying sellers at the point of sale, regardless of where they are based.
The measure is being considered as a way to raise money for cuts to business rates, a tax on many shops and other commercial properties. The debate matters to high street businesses, online sellers and shoppers, as it concerns how tax obligations are shared across different ways of selling.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Requiring marketplaces to collect VAT from higher-turnover sellers could close a loophole that disadvantages retailers who comply with the rules, while recovering revenue to support high street businesses through lower rates. Platforms may be better placed to verify sellers and collect the tax consistently, including where sellers operate across borders.
The case against
Making platforms responsible for collecting VAT could add compliance costs and complexity, potentially affecting smaller sellers and the marketplaces they rely on. Critics could also question whether the estimated revenue is dependable and whether using VAT receipts to fund business rates cuts is the fairest or most effective way to support high street shops.