Yesterday in Parliament: eBay, Amazon, VAT and overseas sellers
On Thursday, a small group of MPs discussed the issue of overseas sellers selling on online marketplaces and not paying VAT so they gain a competitive advantage over compliant sellers on marketplaces like eBay and Amazon.
Chris Heaton-Harris, the MP for Daventry, convened the discussion which was also attended by Treasury David Gauke. It was a “Westminster Hall” debate and not held in the House of Commons chamber.
And if you prefer to read a transcript, here’s the written report in Hansard.
To offer some reflections, perhaps most notably, Heaton-Harris named a number of sellers and their eBay User IDs to illustrate his points. He also estimated how much they were selling and how much VAT he believed they were not paying to HMRC. He can do that using the convention of parliamentary privilege and it brought the issue to life in what is otherwise a quite fusty debate.
He also added that Trading Standards have looked at the issue and estimate a huge loss to the Treasury in lost VAT revenues. Heaton-Harris said: “Paul Miloseski-Reid has been the lead officer on e-commerce for UK trading standards for the past nine years. Based on an analysis of thousands of marketplace traders, he estimates that up to £2 billion of VAT is being lost to the Exchequer each year. Paul estimates that online sales adding up to £10.8 billion annually come from overseas sellers who are not paying VAT.” That’s a very significant sum if correct.
Perhaps most interesting are the Minister’s responses regarding HMRC. David Gauke MP, as Financial Secretary to the Treasury, is the departmental head of HMRC so it’s good he was there. We learnt a few things from him.
Firstly, he considers the issue complex and in some ways this is much more than a VAT issue but also one regarding imports and duties in that regard. He stated that there had been a raid of a warehouse related to this issue in December as reported in the Guardian.
Secondly, he suggested that the issue is more complicated than it looks at first glance saying: “The absence of a VAT number does not in itself suggest that a seller is breaking the VAT law.”
And finally, he is unclear that the marketplaces are liable. He said: “Having looked at this, HMRC’s view is that online platforms have no liability for unpaid VAT where the operator merely provides a marketplace for goods.” (Although what is the situation for Amazon if the goods are shipped from an FBA warehouse?)
So where are we now? It’s hard to say but it seems to me that the ball is in HMRC’s court. The marketplaces are making the right noises about cooperation but they need to know what that means.
Watch this space.
talk is good but we need urgent action NOW
Steel industry buggered with chinese imports what chance online sellers?
waste of time the whole shbang no one wants to take responsablity for the millions of pounds of vat and tax money going out of the country. its been going on for the last 4 years and they are not intrested ebay, amazon, hmrc. instead they would all rather stop uk sellers who put into the country not take but who invest in jobs and keep the uk going. ebay and amazon are only interested in one thing and that’s global trading and that’s one way has well Chinese sellers into the uk. and if they say different please contact me. I have vast experience in china and also have the proof not fiction proof.
You should read tamebay article. Title
‘Amazon are now a commercial shipping agent’
Forwarders and shippers have struggled with delivering container shipments to Amazon fulfilment centres. Due to the labelling and specific packing requirements.
Now its just got easier for them.
We can expect not only more Chinese 3rd party vat free goods on Amazon, but now a much larger variety, with ones traditionally considered to have a ‘high barrier to entry’ being a lot easier to operate in. Not only that, Amazon can also act as a fulfilment centre for goods sold elsewhere in the UK VAT Free.
I expect larger goods that traditionally were hard to send to the UK in part shipments arriving in sealed containers to Amazon fulfilment centres via there own shipping agent.
FINAL NAIL COFFIN !
Sorry to say most sellers on ebay and amazon would of made more money if they invested in Buy to let property in 2008/2009 even 2010 on a scammed mortgage than start a business. For example properties on my road where 230-250K at that time and now they are 420K Plus and they are rarely even available. If i placed 50K in a business then. Id of been better of going 10% down on 2 buy to lets and received nothing my gifts from government policy after.
Because government policy made this hugely profitable and running a simple basic small business extremely uncompetitive and expensive.
I’m struggling to understand this problem. I’m an individual that sells on eBay, or used to. I stopped because I live in Jersey and when despatching items to the UK you have to pay the VAT at the post office (unless its a VAT free items, ie, clothes) or the buyer has to pay their end attracting an £8 fee plus the 20%.
With this added VAT on second hand goods it was not worth my while.
So how can other sellers not be in the same position?
Out of interest, how much would it cost to post from Jersey to the UK? Say an average 300grams Jumper?
In Jersey you pay VAT on everything sent to the UK because its import VAT not VAT on sales. In UK you can sell up to £82K a year and pay no VAT. Problem is caused by fact you are outside of the EU. Your choice…