BHETA is urging members and sector stakeholders to review and respond to the Government’s consultation on extending VAT online marketplace liability to combat non-compliance.
The consultation closes on next Tuesday 18th August 2026.
The consultation can be found on the UK Government website, click here
Why this matters
The Government is considering new rules that could make online marketplaces responsible for collecting VAT on certain sales made by UK-based businesses, where the goods are already in the UK when they are sold.
The aim is to tackle VAT non-compliance and create a fairer trading environment by ensuring businesses that follow the rules are not competing against those that avoid them. The Government also wants the new approach to be practical and avoid placing unnecessary burdens on smaller, compliant businesses.
For BHETA members across housewares, small electricals, DIY, garden and home improvement, this is particularly important because online marketplaces are now a major route to market.
Many UK businesses already invest time and money in meeting their responsibilities, including VAT, product safety, packaging, traceability, warehousing and customer service. They should not be undercut by sellers who avoid these same responsibilities.
The principle is simple: businesses selling into the UK market should be playing by the same rules, wherever and however they sell.
BHETA’s position
BHETA supports the principle that all businesses selling into the UK market should meet the same basic obligations, regardless of whether they sell through physical retail, their own website, or an online marketplace.
BHETA also supports the direction of travel that asks online marketplaces to take greater responsibility where they facilitate sales at scale. Marketplaces are not simply passive noticeboards. In many cases, they provide the customer interface, process or enable payments, set seller requirements, influence fulfilment and control access to consumers.
Where online marketplaces enable large-scale trade, BHETA believes they should also be central partners in compliance.
However, BHETA’s support is conditional on practical and proportionate implementation. The policy should target VAT avoidance and deliberate non-compliance. It should not simply create new administrative burdens, cashflow problems or extra costs for compliant UK suppliers and SMEs already doing the right thing.
Why members should respond
BHETA will continue to make the case for a level playing field on behalf of members. However, individual supplier, retailer, wholesaler, merchant and marketplace responses will help Government understand the real-world impact on different business models and product categories.
Members do not have to answer every question in the consultation. It is perfectly acceptable to respond only to the questions most relevant to your business.
The consultation contains detailed questions on marketplace use, VAT registration, sector impacts, second-hand goods, the Minimum Platform Threshold and administrative costs. For many members, the most important points will be to explain:
- how VAT non-compliance affects competition in your category;
- how online sellers can undercut compliant businesses;
- whether marketplaces should have greater responsibility;
- what administrative impact the proposal could have on your business;
- how Government can protect genuine small businesses while tackling avoidance;
- what risks could arise if second-hand goods are excluded from the rules.
However, don’t be put off. It would be useful if you just answered some key points such as the ones BHETA has made below:
1. Support the principle of marketplace responsibility
Businesses selling through online marketplaces should not be able to avoid VAT obligations more easily than businesses selling through established retail, wholesale or direct channels. If marketplaces enable sales at scale, they should help ensure those sales are compliant.
2. Focus on fair competition
VAT non-compliance creates an unfair price advantage and distorts competition. This is especially damaging in price-sensitive categories across DIY, garden, housewares, storage, cookware, cleaning, tools, electrical accessories, small appliances and home improvement.
3. Protect compliant UK businesses
The policy should not penalise responsible UK suppliers who are already VAT-registered and compliant. Government should avoid duplicated paperwork, inconsistent marketplace processes and unnecessary data requests.
4. Address cashflow and administration
Members selling through marketplaces may face accounting changes, reconciliation issues, altered cashflow, systems updates and professional advice costs. Government should allow realistic implementation timescales and require standardised marketplace reporting.
5. Support a sensible Minimum Platform Threshold
A Minimum Platform Threshold may help protect genuine small businesses. However, Government must also tackle artificial disaggregation, where sellers split sales across multiple accounts, platforms or entities to remain below thresholds.
6. Be careful with second-hand goods
Legitimate second-hand, refurbished and returned goods markets should be protected. However, any exclusion must be tightly defined to prevent new goods being misrepresented as second-hand, open-box, returned or refurbished to avoid VAT obligations.
BHETA encourages members, retailers, merchants, wholesalers, suppliers and marketplace operators to review the consultation and submit comments before the deadline of 18th August 2026.
We believe every business selling into the UK market should meet equivalent obligations. UK suppliers, retailers and merchants should not be undercut by sellers who avoid VAT, product compliance, packaging obligations, duty, traceability or accountability. Online marketplaces have become central routes to market and must therefore become central partners in compliance.
Even a short response focused on the most relevant questions can help Government understand the commercial reality facing responsible UK businesses.
Click here for the Consultation
Click here to read BHETA’s response to the Consultation
