‘Land and Expand’ VAT Laws in the UK

February 2, 2017

Marketplaces Guest Blogger By Guest Blogger

The issue of Value Added Tax (VAT) and cross-border trade (CBT) was very topical in the UK in 2016. It will continue to be relevant in the world of e-commerce in 2017. Specifically, the issue relates to non-UK sellers who are holding stock in the UK. Legislation was passed in 2016 to help reinforce existing rules for sellers who choose to ‘land and expand’ in the UK.

With UK online shoppers expecting quicker delivery times, sellers have been reacting. This means sellers now locate stock in warehouses in the UK, and many are using warehouses in UK port cities. However, once a seller begins selling products from stockholdings located in the UK, VAT comes into play.

When a product is sold from stockholdings in the UK, the sale is viewed as a UK domestic supply. This means the seller must charge VAT at the appropriate rate and include this tax in the final sale price that the consumer pays. However, to charge UK VAT the seller must be VAT registered. The standard rate of VAT in the UK in 2017 is 20% and it is typically payable to the UK tax authorities on a quarterly basis.

From a marketplace standpoint, all overseas businesses selling on eBay.co.uk and Amazon.co.uk must apply VAT on their UK sales from the moment they start selling to customers, regardless of how low their turnover is.

In 2016, legislation was passed by the UK parliament to reinforce these VAT compliance rules for overseas sellers. Essentially, the legislation gave more power to the tax authorities (Her Majesty’s Revenue & Customs HMRC) and allows them to identify more sellers and bring them into compliance.

Both eBay and Amazon have always said that they have no obligation to police VAT compliance by sellers using their sites. They have also claimed they have no liability in cases where sellers are found not to be compliant (be it deliberately or unintentionally). This legislation impacts eBay and Amazon’s position.

Marketplaces are now obliged to keep a register of sellers and share seller information with HMRC. This means HMRC can identify sellers without VAT numbers/VAT ID’s more easily. If they spot a marketplace seller selling products from UK stockholdings without a UK VAT number they write to the seller, remind them of their obligations and request they become VAT registered within 30 days. If after 30 days the seller is not VAT compliant, HMRC writes to the marketplace and requests they correspond with their seller and urge them to become VAT registered. If after a further 30 days the seller is not VAT registered, the marketplace is liable to pay the absent VAT.

Naturally, marketplaces do not want to be in a position where they are responsible for the VAT that sellers have never charged, collected and remitted. In such situations marketplaces are suspending sellers rather than being forced to pay the VAT that is due.

To summarize, if a seller is warehousing products in the UK, selling on eBay, Amazon or other UK marketplaces, are not VAT compliant and resist doing so, they run the risk of being suspended by the marketplace.

It’s likely that similar legislation will be passed in France and Germany in the future. What this means is that if an overseas seller plans to sell on marketplaces in those countries and fulfill from stock holdings in those countries, they will need either a French or German VAT number and they will need to be VAT compliant — or risk being suspended by the respective marketplaces.

For more information about VAT compliance in the UK, please contact Meridian Global Services.

Blog post  by Chris O’Shea, Channel Marketing Manager, Meridian Global Services


Meridian Global Services is a provider of international Value Added Tax compliance services. Meridian helps sellers determine if they need to register for VAT in another country and confirms if they do not have any VAT issues. They handle all VAT registration work on a seller’s behalf if a registration is required and they also manage all of a seller’s ongoing VAT return filings.