Will the budget address VAT fraud on eBay and Amazon?

Updated: we’ve reported the actual details in the 2016 Budget in this post: Budget 2016: eBay and Amazon “can be made liable” for seller VAT fraud

According to reports in the FT (sadly it’s behind a paywall) there may be measures in the UK budget, due to be delivered by Chancellor of the Exchequer George Osborne on Wednesday, that will address the VAT situation for so-called Chines sellers using online marketplaces but not necessarily paying their fair share of VAT.

As the report in Monday’s FT says: “The Treasury is also under pressure to crack down on the illegal sale of goods VAT-free over the internet by sellers from China and elsewhere after politicians exposed the plight of UK businesses being driven out of business by unfair competition.

One option would be compelling the platforms, such as eBay and Amazon, to check whether all their sellers had a valid VAT number where this was required.

Professor Rita de la Feria of the University of Leeds said that in the same way that banks had been made responsible for tackling money laundering, the e-commerce platforms could be required to police VAT fraud. There could be heavier reporting obligations on the platforms, with the implicit threat that they would be held liable for non-compliance.”

Putting pressure on the marketplaces to ensure that sellers have and are displaying a genuine VAT number where required is a clear and unambiguous step but it’s not necessarily that easy. For one, will traders below the VAT threshold be verified that they don’t need a number? How about merchants who aren’t selling £80k on Amazon but might well be doing VATable volume over multiple IDs or platforms? It’s a tough one and how many sellers want eBay or Amazon prying into their tax affairs?

The good news though is that the issue is on the radar of the media and government so we may well see action.

So, we’ll just have to wait and see. Budgets are always speculated on and pondered before the day but it’s what the man himself says at the Despatch Box that counts and what’s in the full document too. We’ll be tuning in.