BBC Panorama – Bilton’s Bargains

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At 10.45 this evening BBC Panorama broadcast details of a sting operation they set up. They were specifically aiming to sell as a Chinese seller on eBay and Amazon with imported goods they smuggled into the country without paying VAT. You can watch The Billion Pound VAT Scam on BBC iPlayer (if you’re based in the UK).

Amazon, eBay and the Public Accounts Committee

The background to the programme is an campaign to raise awareness of overseas sellers, often from China, who evade VAT through various means when selling to UK consumers. eBay and Amazon reported to the Public Accounts Committee in September this year and both pointed out that they act on all reports from HMRC. The marketplaces also stated the obvious that they have limited visibility of who is and isn’t paying their VAT. Even if they confirm a retailer is registered to pay VAT they don’t get to see VAT returns and it’s down to HMRC to ensure VAT is paid.

HMRC reported that the number of online seller from overseas registered for VAT has risen from 700 end of 2015 to 17,537 end of August 2017. There is no doubt VAT evasion happens but HMRC don’t appear to have had the tools to deal with the problem, which is why it was addressed in the budget.

The Autumn Budget

In the Autumn budget, the Chancellor set out a number of VAT measures specifically designed to tackle VAT fraud on marketplaces. They will introduce joint and several liability legislation which will make marketplace liable for VAT for sellers trading on their platforms if they fail to act when HMRC inform them of VAT evasion. As per the the Public Accounts Committee report both Amazon and eBay are more then happy to act if HMRC notify them of problem sellers. On top of that, eBay have from their own internal efforts blocked 893 accounts that HMRC didn’t spot.

Panorama and Amazon

Setting up as ‘Bilton’s Bargains’, Panorama sent a consignment to Amazon and then purchased them as if they were a consumer to demonstrate that they could avoid VAT. However the VAT fraud didn’t take place on Amazon as the goods were already ‘legitimately’ in the EU.

The VAT fraud took place when Panorama imported the goods via Holland into the UK by hiding them within a larger consignment. I have little sympathy if Amazon hold goods in FBA shipped from China, but if goods are already within the EU when they’re shipped into FBA I’m struggling to see how Amazon can decide Panorama’s goods were illegally imported. Obviously VAT should have been charged when they were sold if the business was over the VAT threshold, but how are Amazon to judge this? Plenty of UK retailers trade below the VAT registration level.

Panorama say that research carried out in September suggested 60% of the top Chinese sellers in Europe listed on Amazon did not display a valid VAT number. Amazon told Panorama that they now have VAT numbers that cover 95% of sales from foreign sellers (95% of sales, not 95% of sellers) who use an Amazon warehouse.

Panorama and eBay

Panorama also registered ‘Bilton’s Bargains’ as a Chinese seller on eBay and listed a load of phone covers which they once again imported illegally evading the VAT due. When they listed on eBay a warning would have popped up pointing out that they may need to register to pay UK VAT.

Panorama again posing as a UK consumer managed to purchase just one phone case before eBay shut them down. Panorama claim it was “because Bilton’s Bargains was a new seller”. It wasn’t, it was because eBay detected VAT fraud (twice) and suspended the account. Think about it, eBay don’t generally shut new accounts down merely because they sell something like a mobile phone case or they’d have no sellers left!

eBay tell us that 90% sellers on eBay UK are UK based sellers. Of the remainder, the majority are in the EU. That leaves a smaller percentage of Chinese sellers – 98% of those already have a valid VAT number in place and eBay are working on that remaining 2%. eBay have also made it their policy to enforce the display of VAT numbers for these business sellers, checking them to make sure they are valid.

I’ve met Rob Hattrell, eBay UK VP, several times and he’s always been very clear that sellers who attempt to evade VAT in any way are bad for business. eBay are committed to stamping down on that, hard. Rob has also shown with the huge number of sellers that he’s engaged with by phone, email and hundreds of visits to UK Seller’s businesses that UK sellers are his top priority. Anything that is bad for UK sellers is bad for eBay and that especially includes VAT evading overseas sellers.

39 Responses

  1. If eBay was seriously committed to this problem (and Amazon) they would properly verify VAT numbers. When is the bullshit going to end and the real action going to start ? It’s not rocket science.

  2. A pub landlord is obligated to check the age of customers. If customers lie then that’s not the landlords problem but the minimum requirement is checking their age. Likewise the minimum requirement is checking a VAT number. The excuse that ‘they may not actually be paying VAT’ doesn’t wash. Punters in a pub may not really be 18…but you can always ask them for ID. Simple. This article is biased.

  3. The Billion Pound VAT Scam didn’t paint eBay (or Amazon) in a very good light. Come to think of it, it didn’t do HMRC any favours.

    I only caught the tail end, an interview with HMRC?, but BOY that guy could wriggle…Olympic class, but Richard Bilton (Panorama) was ready for him at every stage, and richard (on behalf of the BBC) even paid his “dues” for the smuggled items.

  4. “if goods are already within the EU when they’re shipped into FBA I’m struggling to see how Amazon can decide Panorama’s goods were illegally imported” They can see that a Chinese seller is selling the goods and the goods are stored and sold in the EU with no VAT number. “A diligent economic operator” (L’Oreal v eBay) would check that …. wouldn’t they ?

  5. No worse than all these mp.s fiddling there expenses all the county council money grabbers with there perks fiddling so whats the difference They just Do it legal. all behind closed Doors to keep it quiet.

  6. Yes the two examples were not perfect (but note they registered a Chinese company at the end of the prog) but anyone who suggests this isnt going on and has not been out of control is deluded. We have many examples of this as has the National Audit office Trading Standards and the public accounts committee. There are traders operating now on these platforms with no VAT number selling goods and evading VAT that are easy to locate. Tax paying users of these platforms also know this to be true. Just denying it doesnt do anyone any favours.

  7. Lets get ready to rumble…

    Well done Panerama for highlighting a massive issue.

    Next programme. Hightlight uk sellers for no vat number

  8. I recall Lamebay defending the Channel Islands LVCR scam. We closed that down and it was illegal despite the excuses on here. The purpose of RAVAS is to highlight and end abusive competition that is based on a tax Scam. Job done.

  9. VAT numbers may be verified but they are set up as media companies in the uk and many are defunct many years ago. They want to check out the israeli ones as there are getting to be hundreds and they all use defunct Vat numbers

  10. Maybe eBay should pay their fair share of VAT and income tax? Seems somewhat hypocritical that eBay pay virtually nothing in relation to their earnings!

  11. BBC should stick to eastenders or Doctor who
    rather than headlining obscure and complicated issues .
    with no easy answers
    their an entertainment and news broadcaster not HMRC or MI5

  12. Is it just me or has it become a bit of a pro ebay page here of late? Yes i see plenty of highlights of ebays failings but there always seems to be some positive spin on it!
    Chris….. is Ebay slipping you brown envelopes, because it is certainly starting to look like it. I have been following tamebay for years, and being totally honest… i see a clear siding with ebay of late!

  13. There is nothing at present to stop an offshore seller sending goods from outside the EU, under the £15 limit, to UK consumers, whilst advertising on eBay. This remains a massive issue and a massive source of lost VAT.

    All this programme is focusing on are sales of goods that a held in the UK at the point of sale.

    The EU is considering ways to stop this, from reducing the low import limit to zero, or requiring offshore sellers to pay VAT.

  14. As a UK seller who has been selling on Amazon and eBay for 8 years, I feel I am qualified to comment.

    My turnover has gone down by 50% since since the Chinese sellers flooded the UK market. So much so that I am no longer VAT registered and get nowhere near the threshold. I am a very small business, but still a business and was still paying HMRC between £1500 and £2000 per quarter VAT. There must be 1000s of people like me who now pay no VAT and think of that revenue that is lost on top of what the Chinese (other foreign sellers are available) aren’t paying.

    In the programme it claimed that Amazon didn’t find out this was going on until 2015. This is absolutely ridiculous. Myself and many, many sellers reported Chinese sellers with no VAT numbers and Amazon, as usual, turned a blind eye. However, UK sellers recently had to go through ‘verification’ which was so hard and strict I know on the seller’s forum that it nearly broke sellers who had their business stopped completely while verification was completed. They literally could not even access their accounts, let alone sell anything. One guy I remember was in the verification process for 7 months and the main breadwinner. Imagine the stress. Where was verification for the oversea’s sellers? Even I, who had all of my ducks in a row, had to cease trading for 2 weeks coming up to Christmas.

    And as for eBay, don’t get me started! I phoned eBay about 2 years ago as I discovered they were overcharging me on invoices for no particular reason and the ‘customer service’ agent’s actual words were ‘we are not worried about you small UK sellers, we have the Chinese sellers keeping eBay going’. I am sure in the programme it said that there were only 2% Chinese sellers and 98% EU sellers, well search for any consumer goods on eBay and see how many UK sellers come up on the first page, I’ll wager, maybe one or two or none!

    And there you have it. In a nutshell! Amazon and eBay have no respect at all for the UK sellers. On top of the 1000s of copied items (and the Chinese using the same images to sell an item for £5 which we use to sell the genuine article for £50) it’s just not worth selling on either platform for genuine sellers any longer.

    Vent over! Thanks for listening.

  15. Well its clear Chris Dawson & Tamebay get kick backs from Amazon, and eBay to try and do some damage limitation on this subject. Shame Chris Dawson isnt as vocal on other topics which affect sellers.

    Chris Dawson & Tamebay deff in Amazon, and eBay’s pockets.

  16. The real story is what is happening at Rotterdam. You can bet that Ebay and Amazon are not the only place goods evading duty are being sold. There are plenty of B&M shops that could equally be getting their hands on these goods. I would say this is the tip of the iceberg but then that would mean criticising free borders and I don’t think that is in the BBC’s remit.

  17. Biltons’ Bargains were only required to pay the import duty, of £514.74. Their total sales were 1 phone @ £5 and 270 speakers @ £6.99, £2102.00 in total, so they would not need to have been vat registered anyway. Amazon pointed out there was no vat fraud anyway. Curiously, had they vat registered voluntarily when the company was set up, and sold everything at the advertised price, plus vat, the total output vat was £689.40, and they could have offset the £514.74 paying net vat of only £174.66, so the vat office benefited by £340.09.

  18. Does not matter how the BBC does ran their sting. It highlights the Millions in fraud and the fact that genuine UK biz is being undercut and real people are losing their livelihoods and jobs.
    It is a combination of HRMC incompetence and the ease in which marketplaces like eBay and Amazon help facilitate the fraud. Amazon at least asked for a copy of our VAT cert , eBay did nothing as far as I could see.
    Just like the Millions of items defrauded from the mail system, the marketplaces do not take any responsibility as long as they can keep avoiding their tax and book a profit by what ever means possible.

  19. The program was similar to the previous tax avoidence Paradise Papers one the reporter did.

    His style, and the BBCs, seems to be to get the general public worked up about tax practices that are entirely legal and explainable.

    In this instance all I could see was smuggling, which is illegal, but happened in Holland.

    Having/displaying a VAT# doesn’t mean a thing. You dont have to,charge vat if you are under the limit, as long as you pay it on the goods you buy to sell, you are legit. He didn’t. He broke the law. Where is th story?

    The story is The BBC broke the law smuggling goods into the EU to have a go at ebay and amazon and make some trashy TV program.

    I am retired , used to import from China and pay tariffs and VAT, and have no axe to grind, jusr annoyed at BBC propaganda trash TV. Standards have dropped for panarama.

  20. Re the speakers imported via Netherlands – as netherlands are within EC how did the speakers get imported into Netherlands without Netherlands customs charging VAT then the goods would become in free circulation ?

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