Marketplaces are continuing to crack down on VAT fraud, (but catch a UK seller by mistake)

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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?

4 Responses

  1. is now worse than ever, looking for a laptop bag on amazon all I could see were Chinese sellers.

    Surprised they are going for such a small fish when clearly 1000s of big ones out there.

    Not exactly hard to catch the market place has provided a search feature simply use it and on the first page of any typical search will be dominated by Chinese fraudster, and

    I have no faith they would be spotting under declarations all round.

  2. He should just whack any old vat number in he has taken from somewhere else.

    Problems solved.

    That’ what everyone else is doing and about as far as the checks seem to go.

  3. Yes!! The exact same thing has happened to us! We sell below the VAT threshold, and yet my Amazon UK seller account was suspended on December 24 for “noncompliance” with the VAT rules because I hadn’t filled in a number. I complained and appealed it right away but no one has gotten back to me yet. Two months later, thousands of pounds in missed sales over the Christmas period, and my account still hasn’t been reinstated. I don’t even know what to do or who else to contact – my business does NOT require me to have a VAT number. 🙁

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