HMRC has confirmed that online marketplaces must account for VAT on goods sold by overseas businesses when the items are located in the UK at the time of sale.
The UK’s HM Revenue & Customs (HMRC) issued guidance on 20 June 2025 confirming that online marketplaces are liable for value added tax (VAT) on goods of any value that are located in the UK at the time of sale when sold by overseas businesses.
To comply with this requirement, marketplace operators must take reasonable steps to determine whether a seller is established outside the UK. While HMRC does not mandate specific checks, it expects businesses to tailor their due diligence procedures based on their size, internal risk systems, and individual circumstances. Operators must also retain records of the steps taken, as HMRC may request evidence to assess whether the checks were appropriate and sufficient.
The guidance includes illustrative, non-mandatory examples of how platforms might assess a seller’s UK establishment status. These include checking for a UK principal place of business, verifying VAT registration details using HMRC’s online tool, and reviewing Companies House registration and director residency.
Further suggestions include examining financial and payment details for UK connections, such as local bank accounts or merchant addresses, and consulting independent payment service providers. Commercial background checks, geolocation data such as UK IP addresses, and the use of UK phone numbers may also help determine the seller’s location.
If any indicators suggest uncertainty about a seller’s UK establishment, HMRC advises platforms to carry out further checks before proceeding.
