HMRC has reported that 7185 online sellers from overseas have registered for UK VAT under new powers granted in the 2016 British Budget. That’s a tenfold increase on the 695 who registered in 2015.
With a growing number of overseas sellers on online marketplaces such as eBay and Amazon, last Christmas alone it is estimated the Exchequer lost tens of millions of pounds to VAT evasion.
Under the rules which came into force in September, HMRC can now force overseas retailers to appoint a UK-based VAT representative or provide a financial guarantee. If the overseas retailer fails to comply with HMRC’s directions, then the online marketplace they use to sell their goods can be held liable.
Financial Secretary to the Treasury, Jane Ellison says: “Having worked in the retail sector, I know what an important time of year this is for retailers and the millions of workers across the country who work in the sector. These new powers will mean that everyone has to play by the same rules and pay the right tax.”
vatfraud.org says of the news: “It’s all well and good HMRC handed out 7185 VAT numbers to internet retailers in the last year; it just proves this fraud is enormous.
“What HMRC failed to say is how much undeclared VAT they have recovered from these retailers. We want to know if HMRC is simply giving out VAT numbers without any due diligence or investigation into these retailers’ online trading history.”
6 Responses
Handed out VAT numbers is good but how do we know they are going to pay there VAT bill?????
Easy for Joe Chink just to close shop and reopen an Ebay account…No way HMRC are going to hunt him down in China.
The legislation used to improve compliance was an extension of the joint and several liability measure. This means that if the VAT goes in paid other parties may be collected from other parties in this case it would be the online reseller. The joint and several liability will only be enforced, by an assessment against the online marketplace, where the controller of the online marketplace has failed to take satisfactory remedial action within the period stated in the notice. This includes cancelling the VAT registration of the overseas business.
One foresees that when an overseas businesses is removed from the VAT register they will form a new trading entity that will once again fail to account for the VAT. Consequently HMRC will eventually legislate to ensure that the online reseller is forced to collect the VAT due on each transaction and passed it to Treasury. A step ithst should have imposed at the outset but which would have been deemed as not proportionate and hence the need for HMRC to jump through a series of hoops to justify the ultimate solution.
That’s all well and good for the HMRC coffers, but doesn’t really help at all with the unfair competition. The overseas sellers are still able to get away with it and charge 20% less.
If Hmrc only think that they are 10’s of millions they well short of the mark I cow why can’t Amazon and Ebay be forced to collect the 20 vat at source? And automatically pay it to them. To be honest they should do it on all sales including uk sellers. That the only way to have a level playing field for all.
i noticed some chinese sellers on ebay have 4 accounts and a different vat number for each account ?
how do you work out a vat return for 4 returns , if you have 1 royal mail account and inport stock in 1 account ?
The problem that HMRC have is that too many customs brokers here at Heathrow do not understand that these distance sellers need to be registered for VAT prior to the customs entry being made and the goods delivered into these Amazon warehouses. If they read VAT notice 700/1 they would know how to declare these shipments to customs correctly and if the seller does is not registered for VAT then don’t clear them.