Ministerial moves to support high street businesses by enforcing a tougher tax regime on online retailers could take a step forward next month.
A consultation launched by former PM Keir Starmer in the summer looked into extending existing VAT rules for the UK’s web-based marketplaces to cover domestic and overseas sellers. Ministers are expected to respond in November, FFD understands.
Exchequer secretary to the Treasury Dan Tomlinson said that the proposal aimed to “support the most traditional marketplace – the high street – whose firms are frequently outcompeted by online sellers dodging their tax obligations”.
He added: “Any revenue raised from these reforms will be ploughed into improvements for the business rates system.”
This policy was echoed by the current Government in July when it announced the 20% cut in business rates for pubs.
Starmer’s successor Andy Burnham added: “This Government will back the businesses that people want to see in their communities.”
Law firm Osborne Clarke said that the proposals in the consultation “represent a significant extension of online marketplace (OMP) VAT liability and will potentially have wide operational and compliance implications for OMPs and the UK businesses that use them”.
It added that web-based marketplaces “may need to make significant investment in systems and compliance infrastructure, particularly those which facilitate food delivery services that may have historically dealt only with domestic sellers”.
This article first appeared in the October issue of Fine Food Digest.
