HMRC is confirming with mobility retailers that disability aids being sold on online marketplaces must include VAT and is challenging the zero-rating of any supplies that are not supported by evidence.
Mobility retailer Easier To has stated that it has received clarification from the HMRC that disability aids being sold on online marketplaces must include VAT.
Julia Phipps, the Managing Director of Easier To, which offers mobility and daily living aids via the Amazon online marketplace, commented to THIIS: “There has been a lot of confusion regarding the selling of mobility aids on marketplaces such as Amazon and eBay.
“Despite attempting to seek clarification on how mobility/disability aids should be priced on marketplaces over the years, no confirmation has previously been forthcoming.
“Many sellers on such marketplaces price the items with the VAT removed – ie. zero rated, based on the assumption that the item is being purchased by someone who is eligible to purchase the item without the VAT – either because they are disabled or live with a life long medical condition.”
However in May 2024 Phipps received personal confirmation from HMRC that the selling price on marketplaces, such as Amazon, must include VAT, and if the customer is eligible to purchase the item with VAT relief, then the customer needs to complete a form which declares eligibility which must then be returned to the seller. The seller must then refund the VAT element to the customer, reducing their next VAT return by the amount of VAT in the order which has been refunded to the customer.
Julia adds: “Marketplaces, particularly Amazon, already take a large proportion of online sales of mobility and disability aids and the above ruling will surely be music to Amazon’s ears as this means that their commission level will increase as sellers now reprice items sold to include VAT.
“It is now probable that Amazon and eBay sellers will have to spend several days/weeks repricing their items on marketplaces, before HMRC starts to undertake the undoubted VAT compliance inspections which will now likely take place within this sector.”
An HMRC spokesperson has confirmed to THIIS that since 1 January 2021, online marketplaces have been liable for the VAT where they facilitate certain supplies of goods to consumers in the UK. This includes, goods located in the UK at the point of sale supplied by overseas sellers, as well as supplies of goods imported in consignments valued up to £135.
For goods supplied through an online marketplace, the person liable for the VAT (whether the seller or the online marketplace) is responsible for applying the correct VAT liability to the supply.
VAT Notice 701/7 (Reliefs from VAT for disabled and older people) as stated here sets out the conditions for when an item may be zero-rated. The notice explains that suppliers should obtain a written declaration from each customer to confirm that they are entitled to the relief.
The HMRC spokesperson pointed out that the notice also confirms that it is acceptable to receive electronic declarations, but where these do not have the means to incorporate a signature it is important to keep evidence of the origin of the document, such as the email message incorporating the sender’s address. The declaration should be separate from any order form or invoice.
The spokesperson emphasised: “HMRC will challenge the zero-rating of any supplies that are not supported by evidence. In addition, where a seller operating on an online marketplace has failed to account for the correct amount of VAT, HMRC has the power to issue a notice to the online marketplace requiring them to remove the seller from their platform or otherwise holding them jointly and severally liable for the VAT.
“Amazon should zero-rate eligible supplies they make if the customer makes the relevant declaration; customers can do this using Amazon’s VAT Relief Declaration Form. For sales made by third parties on the Amazon platform, the customer would always have to contact the third party supplier directly regarding the zero-rating. Amazon provides more information on their help page here.”
https://thiis.co.uk/exclusive-retailer-receives-hmrc-confirmation-that-disability-aids-sold-online-must-include-vat/https://thiis.co.uk/wp-content/uploads/2018/11/computer-image-e1616577714297.jpghttps://thiis.co.uk/wp-content/uploads/2018/11/computer-image-150x150.jpgLiane McIvorNewsroomRetailer NewsTrade NewsUncategorisedAmazon,Disability,eBay,HMRC,Mobility,Retailer,VATHMRC is confirming with mobility retailers that disability aids being sold on online marketplaces must include VAT and is challenging the zero-rating of any supplies that are not supported by evidence.Mobility retailer Easier To has stated that it has received clarification from the HMRC that disability aids being sold...Liane McIvorLianeMcIvorliane@thiis.co.ukEditorTHIIS Magazine
