Who pays VAT on overseas sellers’ UK stock?
For UK-stored goods sold by an overseas business through a marketplace, the marketplace normally accounts for sales VAT. If a business buyer supplies its UK VAT number, the seller accounts instead. Import taxes remain separate. Cambridge China Bridge sources goods with its own staff in China.
Start with where the stock is
This guide concerns China-made goods already stored in the UK when sold to a UK customer. HMRC’s marketplace rule covers UK-located goods of any value sold by an overseas business. Before ordering, ask for the stock location, the seller’s establishment details and confirmation of the marketplace’s VAT treatment.
For goods located in Northern Ireland and sold to a Northern Ireland customer, HMRC specifies that marketplace liability applies where the seller is established outside both the UK and the EU. Flag that route explicitly when asking for confirmation.
What a deemed supply means
For a sale covered by the marketplace rule, VAT treats the overseas seller as making a zero-rated supply to the marketplace. The marketplace is treated as supplying the customer and accounts for the sales VAT. The seller’s zero-rated deemed supply does not mean the customer’s purchase is VAT-free.
Ask the marketplace to explain which transaction its tax report records. Keep the order confirmation and tax breakdown together, so your accountant can distinguish the customer sale from the seller’s deemed supply.
The exception for VAT-registered buyers
If your business provides its valid UK VAT registration number for UK-stored goods, the overseas seller accounts for the sales VAT and must register if necessary. The marketplace should pass your details to the seller. This transaction does not use the customer reverse charge.
Enter your VAT number before completing the purchase and ask who will provide the invoice. If checkout and the seller give conflicting answers, resolve the difference before payment rather than assuming the platform has handled it.
Keep import taxes separate
The overseas seller remains liable for any import VAT and Customs Duty when the stock first enters the UK. Marketplace accounting for the later sale does not replace those import obligations. Ask for separate explanations of the import charges and the VAT on your purchase.
Confirm with HMRC how ownership, intended use and supporting evidence affect your ability to deduct import VAT, rather than relying simply on who paid a charge. Use who is the importer of record for that assessment and VAT on imports from China for the import stage.
Build a purchase file you can reconcile
Ask for a written summary identifying the seller, stock location, marketplace, buyer VAT details, party accounting for sales VAT and party handling import taxes. Match that summary against the order, invoice and payment record. A description such as “tax included” needs an explanation of which tax it covers.
Keep factory sourcing, import clearance and the marketplace purchase as separate entries in your cost review. If a supplier offers an all-inclusive delivery quote, use the DDP shipping VAT guide to frame the questions about ownership and tax evidence.
Frequently asked questions
Who pays VAT when an overseas seller uses a UK warehouse?
For a covered marketplace sale, the marketplace accounts for sales VAT. If a business customer provides its valid UK VAT number, the overseas seller accounts instead.
Does a zero-rated deemed supply mean I pay no VAT?
No. Zero-rating concerns the deemed supply from the overseas seller to the marketplace. It does not make the marketplace’s sale to you VAT-free.
Do I reverse charge VAT on goods already in the UK?
The UK-stored marketplace transaction described here does not use the customer reverse charge. When you provide a valid UK VAT number, the overseas seller accounts for sales VAT.
Does marketplace VAT cover import VAT and duty?
No. Sales VAT and import taxes concern different stages. Ask for separate records showing the import arrangements and the VAT treatment of your purchase.