On Thursday, a small group of MPs discussed the issue of overseas sellers selling on online marketplaces and not paying VAT so they gain a competitive advantage over compliant sellers on marketplaces like eBay and Amazon.
Chris Heaton-Harris, the MP for Daventry, convened the discussion which was also attended by Treasury David Gauke. It was a “Westminster Hall” debate and not held in the House of Commons chamber.
And if you prefer to read a transcript, here’s the written report in Hansard.
To offer some reflections, perhaps most notably, Heaton-Harris named a number of sellers and their eBay User IDs to illustrate his points. He also estimated how much they were selling and how much VAT he believed they were not paying to HMRC. He can do that using the convention of parliamentary privilege and it brought the issue to life in what is otherwise a quite fusty debate.
He also added that Trading Standards have looked at the issue and estimate a huge loss to the Treasury in lost VAT revenues. Heaton-Harris said: “Paul Miloseski-Reid has been the lead officer on e-commerce for UK trading standards for the past nine years. Based on an analysis of thousands of marketplace traders, he estimates that up to £2 billion of VAT is being lost to the Exchequer each year. Paul estimates that online sales adding up to £10.8 billion annually come from overseas sellers who are not paying VAT.” That’s a very significant sum if correct.
Perhaps most interesting are the Minister’s responses regarding HMRC. David Gauke MP, as Financial Secretary to the Treasury, is the departmental head of HMRC so it’s good he was there. We learnt a few things from him.
Firstly, he considers the issue complex and in some ways this is much more than a VAT issue but also one regarding imports and duties in that regard. He stated that there had been a raid of a warehouse related to this issue in December as reported in the Guardian.
Secondly, he suggested that the issue is more complicated than it looks at first glance saying: “The absence of a VAT number does not in itself suggest that a seller is breaking the VAT law.”
And finally, he is unclear that the marketplaces are liable. He said: “Having looked at this, HMRC’s view is that online platforms have no liability for unpaid VAT where the operator merely provides a marketplace for goods.” (Although what is the situation for Amazon if the goods are shipped from an FBA warehouse?)
So where are we now? It’s hard to say but it seems to me that the ball is in HMRC’s court. The marketplaces are making the right noises about cooperation but they need to know what that means.
Watch this space.