Next chapter in eBay UK’s Chinese sellers and VAT dispute
The Daily Mirror has published a follow up to its previous story regarding Chinese sellers and the payment of UK VAT on their UK sales. It’s called: These Chinese sellers on eBay should be paying VAT – so why are they listing other people’s VAT numbers?
The article by Andrew Penman comes two weeks after an initial investigation: VAT evading Chinese firms are wiping out British business.
Yesterday Penman said: “As if by magic VAT numbers have been suddenly appearing on the eBay pages of Chinese sellers since my exposé about foreign tax avoiders.” And it does seem that there has been some movement.
And as eBay say:
“We understand that all of the Chinese sellers previously mentioned in the Daily Mirror were issued with UK VAT registration numbers. We do not comment on an individual seller’s tax affairs and do not have access to their detailed tax records which are held with the tax authorities. We are looking into the eBay listings of these sellers to make sure they comply with our policies.”
It seems that there is some progress here but equally it’s not going to delight many reputable eBay sellers. I’d say that it’s taking time to work through the system at HMRC and we know how long such organisation can take take before action.
It will be interesting to see whether eBay’s policy check on these sellers makes a difference, but in the meantime the best action when it comes to any sellers possibly avoiding VAT is to report them to HMRC.
Progress is slowly being made here.
If you take a look at the sales figures of the Chinese sellers in the article, they account for over 50% of sales of the top ten & are running multi million £ operations; this sales dominance is not just confined to sellers of iPad cases on eBay.co.uk.
The problem runs much deeper with eBay business sellers across all catergories masking their true identities; using fake company information, PO Box addresses, fake UK addresses & displaying no VAT information.
The true scale of the problem is completely beyond comprehension; there are 1000’s of Chinese & fake companies now trading goods on eBay.co.uk. We aren’t talking a couple of million here; it’s more like £100’s of million.
HMRC can’t be made responsible to verify and ensure that every eBay Business seller account is not committing VAT fraud. Why should public funds be used to stop this happening. It’s eBay who are making huge amounts of money in fees out of these sellers.
It’s a very simple fraud for eBay to stop.
eBay should invest some of their money to actively ensure that all business sellers provide a verified registered company name, registered trading address, use a VAT number issued in their name and verify that the Paypal account used by the business seller is registered to their company name too.
If a business seller account can’t be verified then they shouldn’t have a business seller account.
But as we can see from this episode this is clearly not happening.
HMRC & the Government now need to step in and take a good look at what eBay Business Sellers are getting away with and implement new legislation that will force eBay to take a more responsible approach to validating business seller accounts….
Reporting a seller to HMRC is a waste of effort. I have done this many, many times with a number of UK sellers never mind any Chinese sellers. each time I have provided HMRC with exact eBay turnover (nevermind elewhere) for each UK seller derived via terapeak, this has been done by email via the HMRC website, by a number of letters, and letters to George Osbourne at 11 Downing Street, and absolutely nothing has been done about any of them and they are all still not VAT registered.
HMRC quite clearly don’t have a grip on this problem, the scale of the fraud shows this. eBay, Amazon, et al will never do anything unless forced to, or if they feel they might be held might liable, or public pressure takes its toll.
I’m not sure just making them have verified and checked out business details will solve the problem, its a step in the right direction, but they can still do all this and then not pay a penny.
Once they’ve got their money HMRC can never hope to get it back, therefore the only way to sort this problem is to take it straight away, deduct at source. You don’t give them the option not to pay then.
In the USA, Amazon already deduct sales tax at source for foreign sellers who use their fulfilment centres, and pay to the US govt directly, its a working system, proof enough it can be done, complicated or not.
You have to go to the source of the problem, of all the different proposals I’ve seen, deducting at VAT source seems the easiest for all parties involved, and the method least open to abuse.
Another follow up in yesterdays Daily MIrror:
The only way to fix the VAT fraud problem is to tax all ebay and amazon businesses (UK and foreign) at source, then it will be a level playing field for all. Then all properly VAT registered business will get a large rebait every three months. Considering how this Country is struggling to balance the books and faces massives cut to public services in the next 5 years it seems unbelievable that government and HMRC are happy to allow this to happen can fix it via a simple change in legislation.