HMRC is seeking consultation on its proposal to introduce an online sales tax (OST), which it believes could address imbalances between the taxation of the retail sector businesses operating wholly online compared to those operating in store specifically in relation to funding business rates reductions for those operating through physical outlets.
It should be noted that HMRC have not confirmed that it intends to proceed with the introduction of an online sales tax or indeed if it should, how it would work and what would be in scope. The Government welcomes responses to this consultation by 20th May 2022 and details on how you can respond are noted below.
There are many questions being raised in the consultation document, which HMRC is seeking views upon and these include:
- Which goods and services would be in-scope of the tax?
- How does one define an online sale and should this extend to ‘remote’ sales made by phone or post?
- What would be the distinction between a reservation and a completed transaction for the purposes of an OST?
- Would any exemptions be appropriate, such as for click and collect purchases or for certain goods and services?
- At what point in the transaction would an OST be levied – consumer, or vendor? And what would be the role of intermediaries such as marketplaces?
- What would be the territorial scope of an OST and how would crossborder sales be treated?
- Would a threshold or allowance be appropriate to account for smaller firms or those with a lower proportion of sales made online?
- How would an OST be reported to tax authorities and what would the payment schedule be? And what data and systems would be required?
Accordingly, if you are an interested party such as a retail business operating through online platforms only, you should consider responding to the consultation. Additionally, those retail business operating with a physical presence on the high street for example, may also want to consider submitting their viewpoint.
A link to the consultation document itself is attached as well a link to the Consulation Response Form which can be completed and submitted to the email address provided: OSTconsultation@hmtreasury.gov.uk
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