eBay refute Daily Mirror on Chinese sellers VAT
eBay have responded to the article in the Daily Mirror reporting that Chinese sellers on eBay UK are evading VAT.
We’ve had quite a bit of correspondence from sellers in addition to comments on Tamebay on the matter and we know it’s tough competing with overseas sellers and that would be doubly so if they had a 20% VAT advantage.
The key headline is that eBay have cross checked all of the sellers named in the Daily mirror article and say that they are all registered with HMRC. One of the interesting facts revealed by eBay in their statement below is that they’ve done a lot of work over the past few years to make sure that Chinese sellers are aware of there obligations.
Where this leaves the situation is exactly where it should be, these sellers shouldn’t be being named and shamed, it should be left to HMRC to ensure that any VAT or other taxes due is collected in the same way as they do for UK sellers.
It’s unlikely that HMRC will divulge details of how much VAT has been paid, if any sellers are behind with VAT returns or if they’re all fully paid up members of the UK tax fraternity. That’s the same privilege that’s accorded to you and me and hopefully that’ll be the end of the story, although we understand that the Daily Mirror had planned on a follow up story. If a follow up is published it will be interesting to hear what else the Mirror has to say.
eBay’s statement in full
“We understand that all of the Chinese sellers mentioned in last week’s Daily Mirror were issued with UK VAT registration numbers. These VAT registrations were achieved as part of an outreach exercise eBay started in 2012 to educate overseas sellers on their UK tax obligations. This has resulted in 450 overseas merchants with UK inventory registering for UK VAT. eBay’s efforts in this area continue and we encourage all eBay sellers to maintain up to date and accurate information on their business location and VAT status. All sellers should display their VAT registration number with their business information, and we will be following up with sellers that are not currently doing so.
We take the VAT and tax compliance of our sellers extremely seriously. All non-UK sellers with inventory located in the UK should be UK VAT registered, and we cooperate with HMRC in all cases to help them enforce the law where there is evidence of underpayment of taxes. Where we identify sellers that are not compliant, we take action to suspend their accounts.
At the request of HMRC, we provide information on any sellers, UK or overseas, where there is evidence of underpayment of taxes. We are verifying all information in the report submitted including the sellers you specifically mentioned. We will take appropriate action if we find evidence of wrongdoing“.
Well this is a lie by eBay (unsurprisingly)
After the article was published in the mirror a few of those sellers identified in the mirror suddenly had VAT numbers appear. SUDDENLY and COINCIDENTLY after the report. Why no numbers before?
Additionally if you follow the numbers through HMRC database you will notice that many are not correctly NETP registered with HMRC NETP office in Aberdeen. They are quite commonly VAT numbers registered to other businesses or individuals (often residential addresses) in the UK and not properly registered as NETP’s connected with the companies in question.
Additionally in about 15 mins of random searches I could come up with about 10+ Chinese sellers without VAT numbers openly flaunting their fraud on eBay.
This is smoke and mirrors by eBay they are not taking this seriously and facilitating this fraud by ignoring the issue and not enforcing their own rules which are expected on UK sellers.
eBay are lying
Well if it’s a lie, seeing as HMRC doubtless read the Mirror and have a copy of the report it shouldn’t be too hard for them to follow up with the sellers concerned….
As for the VAT numbers appearing, it’s not an HMRC requirement that they be displayed (although it’s good eBay practise and there’s no reason not to). HMRC only insist on a VAT number being given if a VAT invoice has been requested.
Re; As for the VAT numbers appearing, it’s not an HMRC requirement that they be displayed (although it’s good eBay practise and there’s no reason not to). HMRC only insist on a VAT number being given if a VAT invoice has been requested.
Not sure this is correct. If you are charging VAT on sales (even if it is included in the price) VAT info has to be displayed.
Chris is correct here. Vat number only has to be supplied on the invoice.
And when a VAT invoice is requested and not provided with the Chinese seller saying they are not VAT registered…?
Many of those sellers listed in the article refused to provide a VAT invoice and / or said they weren’t VAT registered.
See Beachbum’s post below
Like I said….. it’s not an HMRC requirement….
Its a mandatory policy for VAT registered eBay Business sellers to display their VAT numbers:
Under the Electronic Commerce (EC Directive) Regulations 2002 you must provide the following information in the Business Seller Information section of your listings: your VAT number, if your online activities are subject to VAT.
Only one the VAT numbers supplied by the sellers is a NETPs VAT number – and it is not issued in the name of the company that the eBay business seller account is registered too
All the other VAT numbers are registered to UK individuals & companies and not in the name of the Chinese companies that the sellers have registered with eBay.
The VAT numbers should be registered with the NETP’s VAT team in http://www.hmrc.gov.uk/manuals/vatregmanual/VATREG37600.htm
So all 5 sellers are now “use a VAT number that’s false or belongs to someone else” https://www.gov.uk/report-vat-fraud
Seem’s like eBay are trying to cover their back here and have shown complete incompetence in handling the situation and taking action against VAT fraud on eBay.
I hope this story is going to blow the lid off eBay’s inability to verify business sellers accounts.
People have been complaining about Chinese sellers not providing VAT invoices (when requested) for years.
Countless people have reported these sellers to HMRC, eBay and Amazon for years and nothing has been done about it.
I’m glad you posted a link to the article on this as it has made people more aware of the issue. Readers should be well aware that this is smoke and mirrors by eBay.
This has been going on for years and it is well known amongst Chinese sellers how easy it is to evade taxes – even one of my own suppliers openly admits that he does it and that he gets away with it. Naturally I am cutting down my purchases from them as if and when they decide to expand this behavior into the items I purchase from them – I will not be able to compete.
There is plenty of people in the UK doing this as well as other countries, many times it would cost HMRC more to catch them than they would get back, as if they caught up with you doing it you could just place the company in administration and pay no vat!
The big issue I have is you jump through all the hoops on ebay to get TRS status as it’s supposed to be a big deal, yet Chinese sellers and sellers without this still come above you in search.
What you need to realize is ebay see this loop hole as an advantage, It allows sellers on their platform to sell at prices that would not be normally achievable.
They see it as a strength not a weakness so naturally they support it. No way they will shut down these seller themselves. To them its a win ! They loose the customers who don’t want the cheap tat at the lowest price. But gain the ones that do, I suspect the majority. I would never buy a 1.99 phone case from Hong Kong because its garbage, i choose etsy or look elsewhere. But alot of people would.
point is most people would buy @1.99 the phone case from hong kong rather than pay the 4.99 UK seller price that included profit and vat for the same phonecase
Case in point…discussion closed.
Lots of winging people on here but ask them where they buy there shopping from. The supermarket coz its cheap not the local store
BTW i checked My-elink here
Just on of there listing has 47.99 x 2767 sales = £132,788.33
it says Name xxxxxxxxx LIMITED
More finding shows, it was registered in 2012 but never filed any returns.
So im guessing ebay need to get their facts straight as for HMRC….. well…..
Its a shame because that 1 listing could pay for 1 nurse or teacher, alone.
You would have thought eBay would have checked these facts before giving such a pompous rebuttal
The director has another company
This one is in the process of been struck off but this wont stop them selling on eBay
Why the censorship the information on the company public and has to be available by law and anyone to see it the striking off will be announced in the press hardly a secret.
But don’t worry the director will just open another company and start again its how these sort of companies trade run the debts up rip everyone off and start again.
Can a Chinese Seller not simply request a VAT Number from HMRC and then simply not use it?
If you are given a VAT # then regular returns have to be made to HMRC.
Using http://ec.europa.eu/taxation_customs/vies/vatResponse.html why are dates for VAT number requests dated after the Mirror story?
Could ebay be liable for VAT received by sellers but not paid?
Gary those request dates / times are your requests (notice the time stamp_.
Unfortunately in this case it’s not evidence.
Ebay direct quote from above “This has resulted in 450 overseas merchants with UK inventory registering for UK VAT.”
450! There must be at least 10 times that. Since 2012 too, so not this year.
Truely, truely shocking.
Tried entering one of those Chinese VAT numbers online.
Turns out to be a portion of barbecue spare ribs with sauce.
What would eBay say about:
Wholesale Fashion Jewellery Solid 925Sterling Silver Lady Bracelet/Bangle + Box (item xxxxxxxxxxxx)
Wholesale Fashion Jewelry Solid Silver Lady925 Silver Bangle/Bracelet& Gift Box (item xxxxxxxxxxxx)
NEW Valentine Gift Jewelry Solid 925Sterling Silver Women Bangle&Bracelet+Box (item xxxxxxxxxxxx)
These all ship from China/Hong Kong and are being sold as sterling silver but are highly unlikely to comply with UK hallmarking regs. All on page 1 if you search for silver bangle
Would someone from eBay care to take a look and make a statement?
This kind of stuff destroys the eBay market for legitimate sellers.
I’ve had this issue before where wholesalers are describing items as 925 Silver, but they sent out lord only knows what.
Their explanation is “the manufacturer changed the specs without telling us”.
Basically a factory went from producing marked 925 SS products to white metal goods and didn’t infomr anyone?
Cost of returning is high and there is the worry “it may not arrive”, so people don’t bother and chalk it up to experience. There is no recourse for a buyer apart from leaving a neg and that’s water off a duck’s back, seeing as so many of these seller have so many already.
Ebay can’t afford a calculator to work out that the weight of the silver Chain if it were Sterling Silver, would cost more than the Ebay selling price.
But that’s not proof enough.
They really are good at destroying legit British business’s
This has been a giant issue for my business for many years now. There are so many sellers that claim to be based in the UK, selling way above the VAT threshold and knowingly avoid paying VAT and all other taxes when they legally and morally should.
They are causing masses of losses in revenue to genuine, tax paying companies on eBay and they do so with the knowledge that eBay won’t get rid of them because they are making masses of sales so they make all their money and HMRC won’t do anything because, well, I can only assume they can’t be bothered.
I spend the time and ensure any purchases I make are from legitimate UK businesses, but eBay should be proving it to me and getting rid of these scammers.
Also, HMRC should have a team set up to stop this and get those people who are doing it. The country must be losing millions upon millions to this! They are happy to go after a corner shop that is selling booze they brought in from Spain, but not people doing similar on a massive scale!? Why?
These sellers should be booted off ebay and the registered addresses in the UK should be fined for all the dodged taxes by HMRC. That will stop them! But we all know that’s not going to happen.
This is a load of whinging bollocks. Do I care about who pays tax or what they do? Hell no. I pay mine and don’t care about what others do, thats their lookout. It doesn’t even cross my mind.
This is sour grapes – get on with selling your product. If you have time for this crap then either you have too much time, you’re a hater, jealous, or simply unable to compete in the market. Figure it!
Personally I welcome all competition as its great for buyers – it ensures competive pricing and good service – only the incompetant need worry. I shine, do well, and never worry about others! What about you?
Long live the Revolution! 🙂
If everyone avoids paying their taxes imagine the consequences please before you comment on this. The taxes you pay will increase massively to recover the money not being paid by these crooks and as more and more genuine tax paying businesses close down because of people undercutting them massively by avoiding their taxes, the tax bill to you is going to keep going up and up. Do you honestly think this won’t affect joe public?
You are a bewildered fool if you honestly believe this.
who here ?would send Hmrc, a cheque for more, if they think they have paid less tax than they should,
The problem is bigger than just Chinese sellers. There are numerous UK sellers selling under multiple accounts and failing to pay VAT. One of my competitors based in the UK is undercutting me left, right and centre because they are not VAT registered despite having a similar volume of sales as me.
My turnover increases year on year yet my profit is just about the same. It’s actually getting to the point where I’m seriously considering discontinuing 80% of my lines and dropping sales below the threshold.
If you know this Glenn then report them to HMRC. However, if they are not VAT registered then they must buy their stock with VAT, so I don’t see they have a huge advantage over you, and can also not deduct VAT from other costs of running the business as you can.
I don’t know how HMRC could challenge a VAT registered Chinese company not providing VAT returns. Anyone know?
As said elsewhere, claiming 450 companies are now acting correctly is nowhere in the market. If they put 1 member of staff on it they would come up with 450 companies in a few days. Its no big deal and doesn’t fix or control the problem. Until Ebay have a programme to ensure compliance, test purchase from every seller with mystery shoppers to check they are not doing the other fraud of shipping as a gift, and actually chucking non compliant sellers off the platform then the problem will continue.
Another corporate speak statement from ebay that seeks only to paint a good picture and to protect their soft underbelly. I think platforms like ebay and Amazon should be required to ensure sellers are selling legally and be liable if they don’t have a robust process to do this.
The losers are the UK sellers, and they aren’t big enough to challenge ebay. However, if a big company even wrongly suggests to ebay their IP rights have been infringed ebay remove the listing immediately, and say they can’t check out whether the big company is right so don’t take the risk.
So why is it they don’t have the same immediate response to reported cases of VAT fraud? Surely not because the seller is too weak to challenge them?
The trouble is there are plenty of UK based traders who are doing all they can to avoid tax too. Does eBay really care as long as it gets its own fees?
I really like the picture chosen (generated?) for the article
Why is there no mention about fulfilment company’s making a lot of money and facilitating which might possibly be fraud in a large scale?
The mirror have followed up:
Hopefully Andrew Penman will look into more aspects of way sellers from the far east and sellers of goods from the far east operate through eBay.