HMRC now has new powers to tackle overseas sellers dodging VAT

On Thursday the Finance Act 2016 came in to force. It’s the result of the UK Government Budget that was delivered by then Chancellor George Osborne earlier in the year and at first glance sounds inconsequential.

But for marketplace sellers, businesses using eBay and Amazon in particular, there are a few measures now in force that means HMRC has greater powers to tackle sellers from overseas who may be dodging their VAT obligations. We’ve covered this before in several stories and you’ll doubtless be aware of the issue.

What are the new powers?

Here’s the Government’s own summary of the new powers:

“HMRC is strengthening existing VAT legislation for directing overseas businesses that should be registered for VAT in the UK to appoint a UK-established VAT representative and giving HMRC greater flexibility in relation to when it can require some form of security.

To support this, HMRC will also be given new powers to make 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.”

What happens next?

Amazon has made its position clear and says it has started to take action clamping down but eBay’s approach has been less transparent. Basically though, the ball is in HMRC’s court now with these enhanced powers. So we hope that they will be quick off the mark and start using them to make demands on the marketplaces and the VAT dodgers.

And don’t forget that about groups like VATFraud.org who have worked hard to get these powers into place. You can also report offenders via their website.

What is notable, though is that there is a huge prize at stake for the UK coffers. Estimates vary but the government’s (probably timid predictions) suggest that cracking down on this could reap the Exchequer coming up to a billion quid by 2020. And that’s a tidy sum.

So watch this space, tell us what you see and hopefully this will be good news for UK sellers paying their way. But when it comes to proofs, we tend to find them in puddings.