As of 1 September 2022, HMRC have changed the way that they carry out VAT assessments for overseas based traders who use online marketplaces. These follow the changes to VAT rules for overseas sellers which were introduced on 1 January 2021 and outlined in a previous blog.
Prior to 1 September 2022, if HMRC had reason to believe that VAT returns contained inaccurate information, they would send information requests to overseas traders. However, as a result of the changes in processes, HMRC will instead start sending assessments of what they believe the correct figures should be based on the information that they already hold. This is because HMRC believe that they have the right information to do so without needing the traders to send them the information.
These assessments will cover VAT returns for periods up until December 2020 (prior to the rule change from 1 January 2021) and be subject to statutory reviews and appeals rights. The assessment letters will tell traders what to do if they think that the information held by HMRC is wrong and want to provide more information.
HMRC have said that they will work with traders that struggle to pay an assessment to arrange a payment plan agreement. If a trader does not pay their assessment or agree a payment plan, HMRC will inform any online marketplaces used by the seller and issue a joint and several responsibility notice. This will make the marketplace potentially responsible for any unpaid VAT and most likely result in the seller’s account being blocked. Once HMRC withdraw the notice it can then take up to 6 weeks for hosts to allow traders to use their platform again.
A VAT assessment letter has a 30-day appeal process, so it is important to take quick action if this is received following the above rule change. HMRC also recommend that overseas traders take action to correct possible errors on VAT returns that have already been submitted before an assessment is received. Please contact FKGB Accounting if you are an Amazon trader who needs assistance with fulfilling your VAT reporting obligations.
