AAT comments on potential online shopping tax as business rates replacement

The Chancellor is considering a new tax on goods sold online amid growing concern about the collapse of the high street as Britain emerges from the coronavirus (Covid-19) crisis. AAT comments that online marketplaces should be liable for the collection and remittance of VAT to reduce VAT evasion and level the playing field for small businesses.

Adam Harper, AAT Director of Strategy and Professional Standards, says: "Reflecting on the news that the Chancellor is looking at initiatives to protect high street retail from the competition represented by online shopping – with the government looking to address the challenges of the deepest recession Britain has faced in 300 years – exploring the options for taxing online shopping as a potential replacement for business rates seems appropriate.

"AAT has previously recommended that online marketplaces should be liable for the collection and remittance of VAT as it would reduce VAT evasion, level the playing field for small businesses (whether bricks or clicks), reduce the administrative burden for small businesses who trade online and also raise much needed revenue for the Exchequer.

"The Office for National Statistics1 released figures indicating that online spending as a proportion of total sales stood at 31.8% in June in comparison to pre-pandemic levels of approximately 20%. While the June figure has reduced slightly from the May position – which was before much of the high street reopened – it is reasonable to assume that this trend amongst consumers will continue. This is further supported by the news that Amazon is looking to expand its UK online grocery service."

AAT has previously called for online marketplaces, including Amazon, eBay and Etsy, to be liable for VAT collection and remittance in the UK and made detailed reference to this in its submission on the 2020 Budget proposals to the Treasury Select Committee.