Is my platform an online marketplace for VAT?
Check the platform’s functions. HMRC’s definition covers websites or apps allowing third-party goods sales and requires involvement in sale terms, customer payments, and ordering or delivery. Payment-only, advertising-only and referral-only services are excluded. Cambridge China Bridge sources products with its own staff in China.
Start with the sales arrangement
HMRC’s definition concerns a business using a website or mobile app to handle goods sales. Its operator guidance specifies that the platform allows third parties to offer goods to customers.
Write down who sells the goods and who operates the platform. Keep supplier discovery separate from your eventual selling channel. Our sourcing route comparison helps you map the commercial arrangement.
Apply every functional test
The business must be involved in all the listed activities: setting sale terms or conditions, processing or enabling customer payments, and ordering or delivery. Ordering and delivery are alternatives within that final test.
Ask the operator to explain its role in each activity. Check the seller agreement against an actual checkout: who controls the sale terms, enables payment, receives the order and arranges dispatch? Save the agreement and relevant screenshots for your accountant.
Check the narrow service exclusions
HMRC excludes a business that only processes payments, only lists or advertises goods, or only redirects customers to another website or app without further involvement in the resulting sale.
For a referral service, follow the customer journey after the link. Ask whether the referring business still handles payment or orders. For a service combining functions, assess the full arrangement against the functional tests rather than assuming an exclusion from its name.
Turn the assessment into a working decision
Ask the operator for a written explanation of its classification, tied to the functions above. Give your accountant the seller agreement, checkout evidence and a description of where stock is held. Marketplace classification alone does not settle the VAT treatment: HMRC also identifies seller establishment, goods location at sale and consignment value as relevant.
Keep sourcing and tax checks alongside each other. Use our online seller sourcing guide for product and packaging decisions, and our import VAT guide for the separate import question. Revisit the assessment when the platform changes its checkout or fulfilment arrangement.
Frequently asked questions
Does taking payments make a service a VAT marketplace?
No. A payment-only service is excluded. HMRC’s functional definition also requires involvement in sale terms and ordering or delivery.
Is an advertising website an online marketplace?
A service that only lists or advertises goods is excluded. Check what else it does in the actual sale.
Do referral websites count as online marketplaces?
Referral-only services are excluded where they redirect customers to another website or app without further involvement in the resulting sale.
Must the platform deliver the goods itself?
HMRC’s test says involvement in ordering or delivery. Ask the operator to explain its ordering role even where the seller arranges dispatch.