Yesterday Lin Homer, the outgoing head of HMRC, answered questions to the Public Accounts Committee part of which covered alleged tax evasion on eBay and Amazon.
There was some confusion between purchases made in the EU where VAT invoices weren’t provided and suppliers outside the EU purposefully avoiding all taxes. Lin Homer did attempt to separate the two issues and some interesting points were made.
MPs were quick to point out that there’s no chance of the individual purchasers having the responsibility for tax and import duties.
To the surprise of MPs, Lin Homer stated out that marketplaces aren’t responsible for VAT. However she added that those people that manage the supply chain should ensure that their supply chain has enough diligence built into it. She was fairly vague as to whether law changes to compel the likes of eBay and Amazon were required or if existing legislation was sufficient.
Lin says that speaking to her EU counterparts, the UK’s online shopping habits are changing faster than any other country but France and Germany are already prepared to look at the situation and international law change may be required.
Digital tax returns are not a solution
Part of HMRC’s solution, at least according to Lin and she should know, is the digitisation of tax returns. I fail to see how this will make the slightest bit of difference. If you’re self employed and HMRC have access to your bank and PayPal account receipts or if you’re a company and similarly your finances are digitally available to HMRC then yes they’ll be able to check that returns you file are correct.
Getting some company in the Far East to open up their bank accounts digitally to HMRC just isn’t going to happen and it’s companies outside of the EU that attract the most accusations of VAT and duty avoidance.
We are all becoming personal importers
Lin then bought the issue back around to individual purchasers and said the real risk of losing tax revenues rises as people become more confident of being personal importers. We all know that if an import is caught for which revenue to HMRC is due, Parcelforce will turn up on your doorstep demanding the money before you get your parcel or Fed Ex will deliver to you and then send you an invoice to be paid. The issue isn’t so much with tax due being collected, it’s with companies specifically evading taxation.
The real issue that HMRC dodged
The complaints we hear from sellers are companies outside the EU holding stock in UK warehouses and distributing it and not supplying VAT invoices, suggesting that they’re not paying any UK VAT. We’ve also heard allegations that companies are displaying VAT numbers belonging to other companies and again failing to provide VAT invoices when requested or simply saying that the transaction didn’t attract any VAT.
This one looks like it’ll rumble on for years before it’s resolved. Perhaps today’s scheduled Westminster Hall debate will start asking more penetrating questions?