Marketplaces are continuing to crack down VAT fraud in their attempt to protecting themselves from joint and several liabilities for VAT imposed by HMRC and other European tax authorities.
This isn’t a new phenomenon as we have previously reported on eBay, Amazon and Fruugo signing ‘Tackling online VAT fraud and error – the role of online marketplaces in co-operating with HMRC’ agreement to tackle online tax evasion.
The agreement sets out ways in which online marketplaces are working together with HMRC. This includes details of co-operation and data sharing, how non-compliance will be dealt with promptly and a requirement for online marketplaces to ensure that non-EU sellers’ VAT numbers are valid and displayed.
HMRC and the government have revised their estimates of how much VAT evasion is down to Chinese and other overseas sellers. Their calculations show that between £1bn and £1.5bn is lost to overseas sellers. Some 40% of the total VAT evasion could be due from UK merchants. That still means 60% is lost to Chinese sellers.
Amazon’s VAT fraud efforts catch a UK dolphin
In their attempt to tackle tax fraud, Amazon have mistakenly asked a UK seller for a VAT number. An UK-based Amazon seller reported yesterday such a case in Amazon seller forum. They said that they received an email in Chinese asking them to provide proof of UK VAT registration, required for non-UK sellers that store goods in the UK. If the proof of UK VAT was not supplied Amazon said they would disable the sellers’ account. The catch is that the merchant’s shop sells below the VAT registration threshold. The seller contacted Amazon seller support and was told it is down to them to comply.
It is great to see Amazon crack down on VAT avoidance, but are any other UK sellers dolphins caught in the net?