The UK government is planning to make online marketplaces responsible for collecting value added tax (VAT) owed by sellers, reported The Times.

Under the proposed measure, platforms including Amazon, eBay, and Temu would collect VAT directly from business sellers with annual turnover above £90,000 ($119,316).

The policy is expected to generate up to £1bn for the Treasury, principally by targeting overseas sellers alleged to be avoiding VAT through weak rules and enforcement.

Chancellor of the Exchequer John Healey is expected to announce that the revenue will support reductions in business rates for high street shops.

Prime Minister Andy Burnham committed during the Makerfield by-election to increase the business rates threshold, a move that would remove 140,000 small high street retailers from the tax at an estimated cost of about £880m.

Government concern has increased over Chinese retailers using online marketplaces to sell below British competitors’ prices while avoiding 20% VAT.

Tens of thousands of UK shell companies have reportedly been established by Chinese citizens and given VAT numbers.

These companies are then used to register sellers on platforms including Amazon and eBay before being closed ahead of VAT payments becoming due.

There is no suggestion that the marketplaces have acted improperly.

Amazon welcomed the plan and estimated it could raise about £700m. A company spokesman cited in the report said closing the loophole “will raise significant revenue for the exchequer”.

Representatives of several of Britain’s largest businesses urged Healey and Burnham not to introduce a “warehouse tax” for larger retailers, a proposal ministers are understood to have rejected.

Stuart Machin, chief executive of Marks & Spencer, said the sector already paid an disproportionate share of business rates.

The Chancellor is expected to set out the measures in the Budget on 28 October.

According to the report, critics urged the Treasury to lower the threshold, warning it could still be open to abuse, but ministers rejected this after reported lobbying from the Federation of Small Businesses.