Five years ago, the government made online marketplaces responsible for collecting and remitting VAT on certain sales by non-UK sellers. It has now launched a consultation to extend that liability. In addition to clarifying which transactions would be subject to the new rules, the consultation explores how those rules could be designed to minimize the burden on businesses not required to register for VAT.

Why the Government Is Acting

The UK government emphasized that non-compliance continues among both non-UK and UK-based businesses, creating an uneven playing field, as non-compliant sellers gain an unfair advantage over businesses that meet their VAT obligations. To minimize these issues, the government proposed expanding the deemed supplier provision for online marketplaces to include sales made by UK-based businesses through online platforms, including domestic sales of goods such as retail items and takeaway food.

Under the proposed measures, VAT-registered businesses would no longer be responsible for accounting for VAT on B2C sales made through online marketplaces. Instead, when a sale is made via an online marketplace, the transaction would be treated as a deemed zero-rated supply from the business to the marketplace for VAT accounting purposes. The online marketplace would then charge the customer VAT at the applicable rate and report and remit it through its own VAT return.

For businesses that are not required to register for VAT, the government is proposing a minimum platform threshold (MPT), with its preferred option set at GBP 90,000. Under this rule, only UK businesses whose sales on an individual online marketplace exceed the threshold would fall within the expanded marketplace liability rules. However, the government is also considering a lower MPT.

The consultation, which includes 35 questions, opened on June 23, 2026, and will close on August 18, 2026. The UK government urges all key stakeholders to share their opinions and comments on the most critical issues regarding the expansion of the deemed supplier provision for online marketplaces.

What This Means Going Forward

If the UK government decides to extend the deemed supplier rules to include domestic sales of goods, it will join Switzerland and New Zealand, which introduced these rules for goods and specific services, respectively. Importantly, the rules primarily target B2C transactions, and there will be no changes to VAT rates.