Tax

AAT welcomes online shopping tax as potential business rates replacement

The Association of Accounting Technicians has welcomed the news that chancellor Rishi Sunak 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.

The AAT said 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.

The Office for National Statistics 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, the AAT said it is “reasonable to assume” that this trend amongst consumers will continue – further supported by the news that Amazon is looking to expand its UK online grocery service.

The group 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.

Adam Harper, AAT director of strategy and professional standards, said: “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.”

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