As an online marketplace operator, it’s essential to determine whether a seller is established outside the UK. This is because, under UK VAT rules, you may be liable for VAT on goods sold through your platform if they are located in the UK at the point of sale and the seller is an overseas business. Failing to apply the correct VAT liability could lead to HMRC holding you accountable for any unpaid VAT.
Here’s a simplified guide to help you understand your responsibilities and how to perform reasonable checks to confirm a seller’s place of establishment.
Why Does This Matter?
If a seller is based outside the UK and sells goods located in the UK through your marketplace, you, as the marketplace operator, are responsible for ensuring VAT is applied to those sales. If you don’t take the necessary steps to verify whether the seller is UK-established, HMRC could assess you for any VAT owed. To avoid this, you must demonstrate that you’ve taken all reasonable steps to ensure the correct VAT liability is applied.
What Are “Reasonable Steps”?
HMRC does not provide a strict checklist of actions you must take. Instead, you are encouraged to decide what checks are appropriate based on factors such as:
- The size of your business
- Your existing risk management systems
- The specific circumstances of the seller
The key is to ensure that the checks you perform are adequate, timely, and address any risks of misidentifying the seller’s place of establishment. You should also keep detailed records of your checks as evidence that you’ve taken reasonable steps.
Examples of Checks You Can Make
While there’s no definitive list, HMRC has outlined some examples of checks you might consider to confirm whether a seller is UK-established. These include:
Principal Place of Business
Verify if the seller’s main business address is in the UK.
VAT Registration Details
Check the seller’s VAT registration using HMRC’s Check a UK VAT Number tool to ensure the details match their legal name and address.
Companies House Registration
If applicable, confirm that the seller is registered with Companies House and has a UK address.
Director Information
Review whether the seller’s directors reside in the UK, as indicated on the Companies House register.
Financial Information
Look for evidence of a UK presence in the seller’s payment details, such as:
- UK bank accounts or credit card details
- A UK merchant address linked to their bank account
- Financial data from independent payment service providers
Background Checks
Conduct credit checks or other background checks using third-party sources to confirm the seller’s location.
Geolocation Indicators
Check if the seller’s device uses a UK IP address or use other geolocation tools to identify their location.
Phone Number Verification
Confirm that the seller uses a phone number with a UK country code.
What If There’s Doubt?
If your checks reveal any inconsistencies or raise doubts about whether the seller is established in the UK, you should carry out additional investigations. This could mean requesting further documentation or evidence from the seller to clarify their status. Taking these extra steps will help you demonstrate to HMRC that you’ve acted responsibly.
Keeping Evidence
Documenting your checks is just as important as performing them. HMRC may ask you to provide evidence of the steps you’ve taken to verify a seller’s place of establishment. This could include screenshots, correspondence, or reports from third-party tools. Keeping a clear record of your actions will strengthen your position if HMRC reviews your compliance.
15 Jul, 2025
