Question to the HM Treasury:

To ask His Majesty's Government what assessment they have made of VAT paid by overseas-based online vendors that operate in the UK.

UK VAT is charged on goods and services sold by overseas-based online vendors at the same rate as domestic sales. This ensures a level playing field, and that these vendors contribute fairly to public finances from their UK business activities.

The Government is aware of VAT non-compliance among some overseas-based online vendors. HMRC has an overall compliance strategy which focuses on addressing all forms of non-compliance. The most recent published VAT gap shows a continued downward trend, falling from 13.7% to 4.9% between tax years 2005/06 and 2022/23.

Since 2021, for some sales, VAT is collected and remitted by the marketplace that facilitates the sale. The Office for Budget Responsibility estimates these changes, alongside the removal of low-value consignment relief, will generate an additional £1.8 billion per annum by 2026-27.