HMRC issued new guidance for businesses which sell goods using an online marketplace on 20 June 2025. It enables online marketplace (an e-commerce site that connects sellers with buyers where transactions are managed by the website owner) operators to check if a seller is established outside the UK, so that it can establish which party is liable for VAT on sales.

Background

An online marketplace operator is liable for VAT on goods of any value that are both:

• located in the UK at the point of sale
• sold by an overseas business through the operator’s online marketplace

The operator needs to establish who is liable for VAT on sales of goods which are facilitated. To confirm this, the operator needs to take all reasonable steps to check whether a seller is established outside the UK. A business is required to keep evidence to show that it has taken all reasonable steps.

This new guidance includes details about how to check where an online marketplace seller is established and provides information about checks and process businesses can put in place. HMRC will review this evidence and will consider all evidence which has been used to establish where the seller is established. In each case, it will consider:

• what steps were performed, including any that are designed to address the risks of a particular case
• to what extent steps were appropriate, adequate and timely in relation to addressing the risks identified
• what the results of the checks indicate
• whether a business took appropriate action in response to the results

Examples of checks

HMRC give the following examples of types of checks which might be undertaken to determine if an online seller is UK-established:

• check for a UK principal place of business
• check that the VAT registration available for the seller matches their legal name and details on HMRC’s Check a UK VAT number tool
• check that the seller is registered at Companies House with a UK address
• establish whether directors reside in the UK, eg; as shown on the Companies House register
• check that payment or financial information shows a UK presence. This can include:
  • UK bank or credit card details
  • UK merchant address attached to the seller bank account
  • other financial data provided by independent payment service providers
• check other commercially relevant information such as credit checks and other background checks from third party sources
• check that the device used by the seller has a UK IP address, or check another method of geolocation
• establish whether the seller uses a phone number with a UK country code

Overview of online sellers

More general guidance from HMRC on online sellers:

• charging VAT when using an online marketplace to sell goods to customers in the UK
• charging VAT when goods are sold if you’re an online marketplace operator
• charging VAT on goods sold direct to customers in the UK

The rules aim to avoid VAT evasion by non-UK online sellers.