VAT Hub

Deemed supplier rules and UK establishment status: the VAT question every marketplace seller must answer first.

Whether the marketplace accounts for UK VAT on your sales, or whether you remain liable yourself, turns on a single fact: are you UK-established or overseas-established? <a href="https://www.gov.uk/guidance/vat-and-overseas-goods-sold-to-customers-in-the-uk-using-online-marketplaces">HMRC's deemed supplier rules</a> transfer the VAT obligation for overseas-established sellers to the platform. UK-established sellers on the same marketplace are entirely outside that mechanism and must account for their own VAT. Getting the answer wrong in either direction creates either a missed registration or an unnecessary compliance burden.

Get in touch
No threshold
Overseas-established sellers on UK marketplaces have no VAT registration threshold; the marketplace accounts for UK VAT on their sales from the first pound. <a href="https://www.gov.uk/guidance/vat-and-overseas-goods-sold-to-customers-in-the-uk-using-online-marketplaces">Source: HMRC marketplace guidance</a>
UK-established
UK-established sellers remain liable for their own VAT on marketplace sales; the marketplace is not the deemed supplier for their sales. <a href="https://www.gov.uk/guidance/vat-and-overseas-goods-sold-to-customers-in-the-uk-using-online-marketplaces">Source: HMRC marketplace guidance</a>
HMRC-challenged
HMRC actively challenges thin UK-establishment claims by overseas businesses. A UK company registration alone is not sufficient; establishment turns on where decisions are made and where resources are located.

Key considerations.

The short answer: who accounts for UK VAT depends entirely on establishment

<p>For marketplace sales to UK customers, <a href="https://www.gov.uk/guidance/vat-and-overseas-goods-sold-to-customers-in-the-uk-using-online-marketplaces">HMRC's deemed supplier rules</a> work as follows. If the seller is <strong>overseas-established</strong>, the marketplace is treated as having bought the goods from the seller and resold them to the customer; the marketplace accounts for UK VAT. If the seller is <strong>UK-established</strong>, the deemed supplier mechanism does not apply; the seller accounts for their own UK VAT as normal.</p><p>The same marketplace can have some sellers inside the mechanism and some outside it, depending on each seller's individual establishment status. The marketplace does not decide this for you.</p>

What 'established' means in practice: the test that decides everything

<p>Establishment is not the same as incorporation. A seller is <strong>UK-established</strong> if they have a business establishment or a fixed establishment in the UK: broadly, a place where business decisions are taken and where human and technical resources are present to carry on the business. Having a UK company number, a UK address on file with Amazon or a UK bank account does not by itself make you UK-established.</p><p>An overseas seller with a UK-registered company but no UK office, no UK staff and no UK decision-making is not UK-established for VAT purposes. An overseas seller who opens a UK fulfilment office and hires UK staff to manage purchasing decisions may acquire UK establishment without realising it. Establishment is a fact-specific analysis, not a bright-line rule, which is why HMRC challenges cases where a UK-incorporated shell is claimed as the business establishment without the substance behind it.</p>

If you are UK-established: you remain fully liable; the marketplace does not collect for you

<p>UK-established sellers must register for VAT once their taxable turnover reaches the registration threshold (based on <strong>gross marketplace sales</strong>, not the net payout after fees), file their own returns and account for output VAT on every sale. The marketplace does not collect UK VAT on their behalf. The marketplace may well collect VAT on your fees and on its own account, but that is a separate question from the VAT on your sales.</p><p>UK-established sellers on EU marketplaces also fall outside any EU deemed-supplier mechanism that applies to non-EU sellers. <a href="/services/selling-into-the-eu">EU cross-border obligations</a> apply to UK-established sellers in their own right.</p>

The 'UK shell' trap: why HMRC challenges thin establishment claims

<p><a href="https://www.gov.uk/guidance/vat-and-overseas-goods-sold-to-customers-in-the-uk-using-online-marketplaces">HMRC's guidance confirms it actively challenges</a> establishment claims where an overseas business has incorporated a UK company but lacks the substance of a genuine UK establishment. The practical risk cuts both ways. An overseas seller who incorrectly claims UK establishment loses the deemed-supplier coverage and becomes responsible for VAT the marketplace would otherwise have collected. A UK-established seller who incorrectly treats themselves as overseas-established and expects marketplace collection that is not coming faces undeclared output VAT.</p><p>Sellers whose establishment status is genuinely uncertain, or who have changed their operational setup, should treat this as a question for a tax adviser rather than a decision made on the basis of company registration alone.</p>

How we help.

Establishment status assessment

We assess your UK and EU establishment status based on where your business decisions are made and where your human and technical resources are located, giving you a defensible answer to the question HMRC asks first.

VAT registration and compliance for UK-established sellers

We handle registration, returns and <a href="/services/ecommerce-vat-compliance">ongoing VAT compliance</a> for UK-established sellers on UK and EU marketplaces, including the correct treatment of gross marketplace sales as turnover.

Marketplace VAT position review

We review how your marketplace is treating your sales from a VAT perspective, check whether deemed-supplier coverage applies to you, and identify any discrepancies between the marketplace treatment and your actual obligations. See also: <a href="/vat/vat-on-marketplace-fees">VAT on marketplace fees</a> and <a href="/vat/135-import-rule">the £135 import rule</a>.

Common questions

Who pays the VAT when I sell on Amazon or eBay to a UK customer?
It depends on your establishment status. If you are overseas-established (not UK-established), the marketplace is the deemed supplier and accounts for UK VAT on eligible sales. If you are UK-established, the deemed supplier rules do not apply: you account for your own VAT, and the marketplace does not collect it for you. <a href="https://www.gov.uk/guidance/vat-and-overseas-goods-sold-to-customers-in-the-uk-using-online-marketplaces">HMRC confirms this split</a>.
Am I UK-established for VAT if my company is registered at Companies House?
Not necessarily. HMRC's establishment test looks at where business decisions are made and where human and technical resources are present, not at the place of incorporation. A UK-registered company without UK operations, UK staff or UK decision-making may not be UK-established for VAT purposes. HMRC actively challenges thin UK-establishment claims, and the consequences of getting this wrong cut in both directions.
Does the marketplace collect VAT if I am a UK seller?
No. The deemed supplier mechanism applies to overseas-established sellers only. UK-established sellers are outside the mechanism entirely; they account for their own UK VAT on marketplace sales and must register once their gross taxable turnover reaches the threshold.
Do overseas sellers have a UK VAT registration threshold on marketplace sales?
No. For overseas-established sellers whose UK sales go through a marketplace, the marketplace accounts for UK VAT from the first pound of sales. There is no registration threshold for this obligation because the VAT liability sits with the marketplace, not the seller. If an overseas seller also has direct-to-consumer sales outside a marketplace, different rules apply to those sales.
Does the deemed-supplier rule apply to sales through my own website?
No. The deemed supplier mechanism is marketplace-only. If you sell direct to UK consumers through your own website (Shopify, WooCommerce), the marketplace deemed-supplier rules do not apply. For low-value consignments of £135 or less fulfilled from overseas, <a href="/vat/135-import-rule">the £135 import rule</a> applies instead.
Can HMRC challenge my UK establishment status?
Yes. HMRC actively challenges overseas businesses that claim UK establishment through a UK-incorporated shell without the substance of a genuine UK establishment (real decision-making, real resources in the UK). If your setup has changed or you are uncertain, get an establishment analysis before relying on deemed-supplier coverage or before assuming you are outside it.

Speak to an ecommerce VAT specialist.

Tell us about your VAT situation and we will reply within 24 hours.

Get in touch