HMRC Received Data on £55 Billion of UK Online Sales in 2025. Here's What Every Overseas Seller Needs to Know.

For most overseas brands selling in the UK, compliance has been treated as someone else's problem. Amazon collects and remits VAT on some transactions. A regulatory partner handles the registrations. The accountant is across it.

What changed in January 2026 is that HMRC stopped relying on those assumptions too.

The short answer is this: since January 2024, every major digital platform - Amazon, eBay, Etsy, Airbnb, and others - has been legally required to collect detailed seller data and report it directly to HMRC. The first reports, covering the 2024 calendar year, landed with HMRC in January 2025. The second round, covering 2025, was submitted in January 2026. In that second round alone, HMRC received data on almost 4 million sellers, covering nearly £55 billion in online earnings - a 272% increase on the previous year. If your declared sales, VAT filings, and income do not match what the platform reported, that discrepancy is now visible in a dataset HMRC is actively building systems to interrogate.

What the platform reporting rules actually are

The UK implemented its version of the OECD's Model Reporting Rules for Digital Platforms, which came into force in January 2024. Under these rules, digital platforms are required to collect and submit structured data on every seller who generates income through their platform - regardless of where that seller is based.

The rules are not optional. Platforms face their own penalties for non-compliance. Amazon, eBay, and the other major marketplaces are reporting in full.

This is not about chasing hobbyists selling old furniture on eBay. Platforms are only required to report sellers who make more than 30 sales per year and earn more than £1,700 - thresholds any commercial brand will exceed within weeks of launch. HMRC's focus, as it cross-references this data against existing returns and registrations, is on commercial activity: brands with stock in the UK, consistent sales volumes, and obligations they may not have met.

What data HMRC now holds on you

For each seller, platforms must report the following to HMRC:

• Legal name, trading name, and registered address
• National Insurance number (for UK sellers) or overseas tax identification number
• Total income earned through the platform for the calendar year
• Bank account details to which payments are made

For overseas sellers, the overseas tax ID replaces the NI number. HMRC receives this information and can exchange it with the seller's home country tax authority. A US brand selling through Amazon UK may find that HMRC shares its findings with the IRS. An Australian brand may find the ATO receives the same.

The numbers are significant. In 2024, HMRC received seller reports covering £25.5 billion in online earnings. For 2025, that figure nearly doubled to £55 billion, across almost 4 million seller accounts. BDO, one of the UK's largest accountancy firms, obtained these figures via a freedom of information request and reported in March 2026 that HMRC is building an automated system to extract and analyse this data - and plans a fresh enforcement programme once it is complete. That programme is not a distant prospect. It is under way.

Why this hits overseas brands harder than UK brands

UK-established businesses trading below £90,000 in annual revenue have a threshold below which VAT registration is not required. Overseas sellers do not.

Any business that is not established in the UK but stores goods here - through Amazon FBA or a UK 3PL - must register for UK VAT before making a single sale. The registration threshold is £0. This rule has been in place since 2021, but many brands that entered the UK market in the years following Brexit either did not know it applied or assumed that Amazon's own VAT collection covered the obligation. It does not cover all scenarios.

This is where most of the exposure sits. A brand that entered the UK market in 2022 and is not VAT registered may now have three or four years of unregistered trading visible to HMRC. Each year of missed VAT filings adds to the liability. Each year of non-registration attracts penalties. HMRC's interest charges run from the date the obligation arose - not the date the letter arrives.

The gaps we find when we look

We regularly carry out compliance reviews for brands that have already been operating in the UK. In most cases, they believe their position is in order. In most cases, something is missing.

The most common gaps:

• VAT registered late, or not at all, for FBA stock held in the UK
• VAT registered in one country when Pan-EU FBA has placed stock in multiple countries, each creating a separate obligation
• Assuming Amazon's marketplace facilitator VAT collection covers all obligations - it does not
• UK-sourced income not declared to the home country tax authority, which HMRC now has the infrastructure to report directly

One brand we worked with had already spent approximately £100,000 attempting UK and EU market entry. The VAT structure was wrong from the start - the account was launched on Amazon Germany without a German VAT number or EPR compliance in place. When they came to us, we rebuilt the operation correctly. That rebuild recovered a five-figure VAT rebate on the period where VAT had been incorrectly structured. The money was there to be recovered. The exposure was there too.

This is not unusual. The brands that get into difficulty are rarely the brands that tried to cut corners deliberately. They are the brands that appointed a logistics partner, listed on Amazon, and assumed the compliance piece was handled by someone in the chain.

What HMRC does when it spots a discrepancy

If the data a platform submits does not align with a seller's declared income or VAT filings, HMRC issues what is known informally as a nudge letter.

The letter is polite but direct. It tells the seller that HMRC holds their platform sales data, flags the discrepancy, and gives a 30-day window to respond - to confirm, correct, or disclose. Penalties for ignoring the letter can reach 100% of unpaid tax. Late payment interest is currently 7.75%, running from the date the obligation arose. Sellers who respond and disclose proactively face lower penalties than those who do not.

This is one of the few areas in tax compliance where acting first has a clear financial advantage. A proactive disclosure, made before HMRC's letter arrives, typically attracts substantially lower penalties than a disclosure made in response to one.

The right time to fix this is before a letter arrives

The platform reporting rules did not create new tax obligations for overseas sellers. They created visibility. The obligations have existed since 2021. What changed is HMRC's ability to enforce them at scale.

If you are an overseas brand selling in the UK and you are not entirely certain your VAT registration, filing history, and income declaration are correct, the window for acting first is narrowing. Two years of data are already in HMRC's hands. A third year is accumulating now.

A structured compliance review costs significantly less than an HMRC investigation - and unlike a nudge letter, it is something you control the timing of.

We work with brands entering the UK for the first time and brands that have been here for several years and found gaps they did not know existed. The starting point is always the same: understand your actual position before assuming it is fine.

If you want to check where you stand, our UK Market Entry Compliance Checklist covers the key obligations overseas brands most commonly miss. Or if you would prefer to talk through your specific situation, we are happy to take an initial call.

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Frequently Asked Questions

Does Amazon collecting VAT on my behalf mean I do not need to register for UK VAT?

Not necessarily. Amazon acts as a deemed reseller for VAT purposes on certain transactions - for example, goods sold by overseas sellers valued up to £135 that are imported at the point of sale. But if you hold stock in the UK through FBA or a third-party warehouse, you have a separate VAT registration obligation regardless of Amazon's own collection. The two obligations operate independently.

What is the UK VAT registration threshold for overseas sellers?

Zero. Unlike UK-established businesses, which must register once annual taxable turnover exceeds £90,000, overseas sellers with no UK establishment must register before making their first sale in the UK if they store stock here. This applies whether you are based in the US, Australia, or anywhere outside the UK.

Can HMRC share my UK sales data with my home country tax authority?

Yes. Under the international exchange arrangements that sit alongside the platform reporting rules, HMRC can share data with overseas tax authorities in countries that have signed up to equivalent reporting frameworks - including the US and Australia. If HMRC holds information about UK-sourced income that has not been declared in your home country, they can pass it on.

What happens if I disclose a compliance gap before HMRC contacts me?

Proactive disclosure is treated significantly more favourably than a disclosure made in response to an HMRC letter. Penalties for unprompted disclosure are typically lower - in some cases substantially lower - than those applied after HMRC has already identified the issue. If you know there is a gap in your UK compliance history, the right time to address it is now.