The Public Accounts Committee (PAC) session on tackling online VAT fraud and error will be broadcast live on Parliamentary TV today (Wednesday the 13th of September) at 2.30pm. Along with various witnesses from HMRC and other interested parties will be Steve Dishman, Amazon Vice President for Taxes, Europe, and Joe Billante, eBay Vice President and Chief Financial Officer for EMEA.
The PAC brief states that in 2015-16 an estimated £1 billion to 1.5 billion of tax revenue was lost to online VAT fraud and error. These losses occur when sellers based outside the European Union import goods into the UK for sale to UK customers. Their products are stored in the UK and then dispatched to buyers. VAT goes unpaid when sellers do not declare the correct value of their imported goods, use false VAT numbers, or avoid registering for a VAT number at all.
Yesterday, HMRC published a report “Prevalence of individuals shopping online from overseas and handling of VAT” which explored the attitudes and experiences of individuals shopping online, including misrepresentation or undervaluation, and consumer awareness of VAT and customs requirements.
Over 1,000 interviews took place in the supporting research and the report concludes “If consumers could be given simple tips on how to identify non-compliant sellers this would enable motivated consumers sufficiently motivated to avoid shopping from them.”
Today’s Public Accounts Committee inquiry will examine the scale of the problem, the Government’s response to tackling online VAT fraud and error, and how it will improve its response in the future.
It is worth adding that this inquiry doesn’t appear to be a witch hunt against Amazon and eBay and there is no suggestion that the companies themselves are being naughty. It’s some of the retailers whose business that the platforms enable that are avoiding VAT and we know both companies have already been responding to HMRC enquiries. It’s also worth noting that a year ago HMRC were given new powers to hold online marketplaces jointly and severally liable for the unpaid VAT of overseas businesses who are non-compliant with UK VAT rules and using their platforms to sell through. This means that marketplaces (like but not exclusively Amazon and eBay) are highly motivated to work with HMRC.
In the past year Amazon have clamped down on overseas sellers without UK VAT numbers and eBay changed to charging VAT on fees which means all overseas sellers will pay UK VAT (at least on fees, if not sales) unless they’re registered with HMRC and reclaim the VAT on their returns.
You can watch the PAC inquiry live as it happens from 2.30pm today, the 13th September 2017 on Parliament Live TV.
8 Responses
Seen no evidence Amazon clamped down. In my categories pretty much all competitors are Chinese FBA and not vat reg
“If consumers could be given simple tips on how to identify non-compliant sellers this would enable motivated consumers sufficiently motivated to avoid shopping from them.” That I doubt cheapest price WINS
I think there are a lot of UK sellers avoiding VAT, in our sector it is rife am told by the VAT people themselves.
We had the VAT people here a few months ago checking all our suppliers out asking how we carry out checks on them etc.
Am so gullible I thought many were just better at negotiating their deals than me, I did not really notice it was so widespread.
Does not help it is so complicated. It will also be lip service from these two long as the fees are pouring in.
It would be pretty simple for Amazon to implement the changes – no stock stored in FBA for overseas companies unless VAT number checked and confirmed.
I took delivery of something yesterday from Amazon prime, came in two days – Chinese seller no VAT – (I had not checked who the seller was), not happy that I cannot get a VAT receipt as this was a business purchase
it would also be nice if Amazon introduced an easy reporting tool (but then I guess we would end up in a big mess with competitors reporting maliciously which I would not want)
FBA fees are zero rated even though the service occurs in the UK. How much does that cost the country?
I wonder how much VAT evasion is homegrown versus foreign? By home grown I mean, one man operating from garage.
So basically found guilty again both eBay and Amazon. As I have said before these two do very little good for UK business. 50% of online trade it is too much they have way too much control over trade in this country.
As far as I remember with Amazon we had to upload a copy of our VAT cert. ebay I swear I just had to add a number, no checks or verification. Amazon could stop this today.
The Home Grown VAT avoidance is also a major issue. Dealing direct with Publishers it is impossible to make any profit with some of the prices we see on these marketplaces unless you are taking serious shortcuts. LVCR Vat avoidance is still an issue and out there.
Now Amazon and eBay will go back to making their FEES ever how they see fit and stuff what it means to others, trust me they will not change.
So the Politicians need to now mandate and force them to be compliant and start looking after the interests of UK biz for a change, customers do not care they live in a bubble and will always go for the lowest price item.
Amazon are DEMONS. I know of a seller on Amazon for many years who as described above “operates from a garage”. They brag about there £100K + turnover and equally brag about not paying any VAT, TAX, NI etc.
Myself (being a bit “bitter) have been trading on Amazon for a couple of years, fully compliant, No chargeback, All green lights with my metrics, not one complaint, pay all my VAT, Tax etc. Amazon decided to suspend my account without any reason. Numerous letters set to all departments INCLUDING the UK managing Director. All go UNANSWERED. (great service from this greedy animal) But the main point of this message is that Amazon have held onto my funds (£500) for over three months now again no one will talk to us or explain why.
Now although my funds of £500 is small fry, Imaging just how much Amazon hold onto say 5% sellers funds without any reason. They holding onto MILLIONS of £s of sellers money whilst they are deciding why they have suspended them and to completely ignore them. Complete mega Arrogance.