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HMRC exploring options re VAT avoidance from overseas sellers on eBay and Amazon

By Dan Wilson December 22, 2015 - 10:56 pm

According to the Guardian, HMRC and Treasury officials are slowly coming round to the issue of overseas sellers not paying VAT on UK sales on marketplaces eBay and Amazon. This is, in part, thanks to the efforts of Lord Lucas that we wrote about yesterday.

The Guardian has been investigating the situation and has bought items where VAT should be paid but been unable to prove that sellers have been fulfilling these obligations. You can read the latest article here.

And of all the options on the table, one under consideration is holding the marketplaces themselves responsible for the VAT. Treasury spokesman Lord Ashton noted HMRC was now “looking at all possible options”, including “whether online platforms should be made liable for VAT”.

As the Guardian says: “Top tax officials are exploring whether Amazon and eBay can be forced to foot the bill for ballooning VAT fraud associated with an army of small overseas sellers who are rapidly coming to dominate sales of many popular items on Britain’s leading shopping websites.”

It’s hard to see how such a system might work. But it seems that the issue is now on the UK Government’s radar.

  • Truth
    1 year ago

    Why is it hard to see how this might work ? If you sell more that £82K from a UK location you should have a VAT number. Amazon and ebay just have to say If you don’t produce a valid verifiable VAT number your account is shut down. HMRC just use the courts to ensure that if Amazon or ebay refuse to implement this they pay the VAT. Simple.

  • Truth
    1 year ago

    Amazon can spot a price difference they are unhappy with on a gnats arse so they can spot VAT dodgers…

    • Gerry007
      1 year ago

      .
      It is rather simple really, Amazon & Ebay know each sellers Turnover, so how difficult is it to ‘block’ sales if it exceeds the VAT freshold, without a UK registration #.
      Will they do that, NO, because they would loose money on sales/profits, it is rather simple really they don’t care.. period!!.

      Many of these sellers based in HK/China etc, have legions of sellers in the EU, that act as agents with EU addresses (many actual sell fast/hot sellers direct from the UK/EU). This allows indivigal registration of the online platforms as indivigal sellers, not the same co, check the seller’s details and many of these sellers are actually the same HK/CHina based sellers, bit like drop shipping…..!!

  • Tinker
    1 year ago

    Its even more simple if the government take the easy option and simply put a tax on all online sales

    • Tinker
      1 year ago

      And even if they dont tax every internet sale collectable and payable by the market places , the very thought of it will focus ebay / amazons attention

  • Tinker
    1 year ago

    As The Gardian article suggests the tax system is for the pre internet age , not only do chinese and international sellers avoid the tax system many domestic sellers do so,
    Make no mistake the tax man might be slow but changes are coming for us all.
    We predict the next big hoo-ha will be business rates , cash straped local authorities will be wanting their slice of the bedroom and garage online business operations

    • 1 year ago

      The good news is that Business rates can be less than Council Tax… they can’t charge you both!

      The bad news is that as soon as you pay business rates it’ll make it harder to flog your house, that’s if your house deeds allow you to register as a business property in the first place.

    • Tinker
      1 year ago

      councils will be looking for their pound of flesh, expect things to change

  • Peter
    1 year ago

    Most interesting is this passage from the article in the Guardian:

    “The items were being sold by 23 different sellers that appeared to conduct little or no business activity in the UK. Nine gave addresses in Hong Kong, eight in China, and six in the US. All had arranged for Amazon to hold their stock in the UK, pack and send parcels and deal with payment and returns queries.”

    Seems that Amazon are helping these companies by allowing them (even encouraging them) to use FBA, let’s not also forget that those sales cannot attract negative feedback on Amazon, win win for those sellers no tax to pay and only positive reviews.

    Amazon declined to answer several questions …
    What a surprise, Amazon continue to be a law unto themselves.

  • Rob
    1 year ago

    VAT is only paid when turnover hits a certain threshold. All a Chinese seller needs to do is open a new account once they get close to that, and boom 20% of tax is avoided. Chinese sellers have millions of ghost accounts ready to go. Multiple accounts is one of the reasons why Chinese sellers dominate eBay (and more of Amazon) listings, its because they use multiple accounts selling the same things again and again, and they keep setting up new ones when the old ones are done with. I’m not sure how this would be enforceable for both small and big sellers.

    • Tinker
      1 year ago

      Its very possible that for an internet sales tax on every sale , the tax collected by the market place as part of the selling fee then paid to hmrc by the market place,, legitimate business could then claim some or all of these fees back in tax returns

    • Dan
      1 year ago

      The VAT threshold for NETPs doesn’t apply and hasn’t done so since 1 December 2012.

      http://www.hmrc.gov.uk/manuals/vatregmanual/vatreg37050.htm

      This wouldn’t work as a way to circumnavigate their VAT obligations as it is due on ALL UK held stock.

    • Truth
      1 year ago

      Somehow I think that would be easy to spot… Why wouldn’t UK ebay sellers be doing that now ? Reason…its a pain in the neck and totally unmanageable

    • Truth
      1 year ago

      Also if they make Amazon and ebay liable they might just have to make an effort to stop VAT evasion.

    • Derek Duval
      1 year ago

      Opening new Ghost accounts isn’t as easy as it sounds and to boot an account takes ages to build momentum especially with Ebay self imposed seller restrictions.

  • ifellow
    1 year ago

    What they should do is grow a pair and reduce tax free imports,.gift or other wise to 0.00.

    Every product imported from outside the Eu should be supplied with a commercial recipt.

    Import agents are allowed to charge a fixed import fee for collecting duties.

    All goods suspected under random checks that are under declared may be disposed off.

    You need to get real when half the worlds. Taking the pi*s out of you.

  • Boss-Hog
    1 year ago

    There are thousands of outfits breaking the VAT laws on eBay/Amazon, you can spot them with little difficulty, you can report them to eBay, Amazon and even HMRC and nothing will be done.

    The impact goes far beyond VAT, sales that would otherwise go to UK companies, add up the lost corp tax, lost jobs, lost income tax, lost NI, and the tens of billions sucked out of the UK economy, the impact is massive.

    George Osborne if your listening, forget public sector cuts, just sort this out!!

  • Kai
    1 year ago

    “an army of small overseas sellers”

    Are you fooking kidding me? As I know many of Chinese sellers have between 10-55 eBay IDs worldwide. Their annual revenues are greater than ASOS.com or BOOHOO.com. They hire over 200 staff and operations expand from Hongkong to Tianjing with many office in China.

    How can you in your wildest dreams to say SMALL OVERSEAS SELLERS?

    Let’s say HMRC is fooked up in collecting VAT on overseas sellers, Guardian is also fooked up that not getting the full facts strength.

    Sorry for my lamguage but it’s really furious to see whoever trying to report something with such limited knowledge.

  • Derek Duval
    1 year ago

    The only system to work is for HMRC to force Ebay/Amazon to start withholding VAT when an Ebay/Amazon account gets over the VAT threshold for UK sales.

    I write Database procedures like this on a daily basis for my full time job, its so easy… This will weed out 95% of VAT Fraud…And to boot there hundreds of UK accounts doing what the Chinese are doing anyway just do some random searches on products and see Ebay accounts with over 500 Feedback a month and do the maths on there sales

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