The UK government published consultation feedback and its response to a plan to extend marketplace VAT liability to domestic sellers, saying it aims to address noncompliance that puts compliant firms at a disadvantage.
HM Revenue & Customs (HMRC) and HM Treasury posted the summary on GOV.UK on Oct. 28. The proposal would apply to marketplace sales by UK businesses when the goods are in Britain at the time they are sold.
The plan would broaden rules introduced in 2021, which made online marketplaces responsible for VAT on some sales by overseas sellers. The government says those changes improved compliance and helped address VAT losses. It says noncompliance among sellers at home and abroad still creates an uneven competitive environment for businesses that follow the rules, both online and in high street retail.
Officials sought views on which transactions and businesses should be covered, how the proposal might affect firms below the VAT registration threshold, how it would work alongside existing VAT rules, and its practical effects on marketplaces and sellers. The June consultation on marketplace VAT liability opened June 23 and closed Aug. 18, 2026.
