UK anti-VAT fraud split payments on e-commerce
The UK’s Chancellor has announced in today’s budget a public consultation on introducing anti-VAT fraud spilt payments on B2C e-commerce.
The mechanism would work by UK consumers automatically paying the VAT element of any online purchase from overseas sellers directly to HMRC. This would aim to eliminate the growing problem of VAT fraud by non-EU online sellers, especially from China. This has been estimated to cost the UK up to £2 billion per annum.
A similar measure has been used in Italy for government business with some success.
In 2016, the UK introduced a range of measure to stem the problem of non-EU sellers failing to VAT register and charge the correct VAT rates. These included making online market platforms potentially liable to any missing VAT.
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