In a consultation document published in June 2026, the government says that, although the reforms have "improved compliance and helped tackle VAT losses", "non-compliant behaviour persists among both overseas and UK-based businesses".  

Government proposals 

The government is seeking views on proposals intended to tackle non-compliance on online marketplaces. Briefly, the government is considering making marketplaces responsible for accounting for VAT on sales they facilitate on behalf of UK businesses. This would include domestic sales of goods, including retail goods and restaurant or takeaway food, where they are sold via online marketplaces. 

To minimise the impacts on businesses not required to register for VAT, the government is considering either:  

• making online marketplaces liable only where per platform sales by UK businesses are above a specified value (the minimum platform threshold (MPT); or 
• introducing a VAT rate relief available to UK businesses below the VAT registration threshold. 

The government is also interested in exploring alternative suggestions. 

ICAEW's response 

In its response to the consultation (ICAEW Representation 57/26, see further information, below), ICAEW has expressed strong support for the government's objective of tackling VAT non-compliance on online marketplaces.  

However, ICAEW notes that the non-compliant behaviours described in the consultation are, in large part, failures to comply with existing VAT registration obligations. Effective action against that non-compliance would help ensure that compliant businesses are not disadvantaged by competitors that fail to meet their VAT obligations.  

ICAEW also questions whether online marketplaces are best placed to determine whether sellers have met those obligations, given that they do not have visibility across all trading channels. Responsibility for making such determinations should, wherever possible, rest with HMRC. ICAEW suggests that the government should carefully consider how existing HMRC data, powers and enforcement tools could be used to address non-compliance before placing additional obligations on online marketplaces. 

Further, ICAEW believes that neither of the options intended to minimise the impacts on smaller businesses would achieve the government’s objectives, explaining that: 

• the MPT option would be unlikely to address the underlying problem because it measures platform-level turnover rather than a seller’s total turnover across all sales channels, limiting its ability to identify businesses that split sales across multiple marketplaces. It would also create a new population of repayment traders, creating additional administrative burden for HMRC; and 
• although a VAT rate relief could mitigate the impact on smaller businesses, it would not address under-registration itself and would still require an effective mechanism for identifying businesses that qualify for the relief. 

ICAEW’s proposal 

Instead, ICAEW proposes defining the scope of the charge by reference to a credential issued by HMRC – a VAT registration number or a lightweight HMRC-issued marketplace identifier for businesses below the VAT registration threshold – rather than by turnover or establishment. This would enable HMRC to aggregate a seller's activity across multiple marketplaces, avoid creating repayment traders, and remove some of the distortions that might arise under the consultation's proposed options.  

ICAEW acknowledges that such an approach may require greater implementation effort by HMRC than the options currently under consultation, but believes the potential long-term benefits merit further consideration. Full details are provided in the representation at Appendix 2.