More details on Budget 2016 re VAT Fraud on eBay and Amazon
Here’s a bit more detail on the VAT fraud situation, specifically relating to online marketplaces, from yesterday’s Budget.
And it’s not ideal. We’ll be waiting for this year’s Finance Bill to pass (the Budget Bill) for some powers to come into force. Others will fall into the Finance Bill 2017 and other initiatives won’t come into force until 2018.
And we suspect that means we won’t see any real action any time soon. Governments just don’t work quickly
We wrote about the Budget on Wednesday with regards to non-EU sellers not playing fair on VAT on eBay and Amazon marketplace sales in a piece called: Budget 2016: eBay and Amazon “can be made liable” for seller VAT fraud. But with Budgets the devil is in the detail and it looms like we’re going to be waiting until HMRC swoop into action and eBay, Amazon and others are forced to respond and act.
Here’s the full blurb verbatim from this page (clause: 7.26)
“VAT: consultation on penalty for participating in VAT fraud – The government will consult on a new penalty for participating in VAT fraud in spring 2016. Subject to the consultation, the intention is to legislate in Finance Bill 2017.
VAT: tackling online fraud in goods – VAT representatives and online marketplace liability – The government will legislate to provide HMRC with strengthened powers for directing the appointment of a VAT representative and greater flexibility in respect of seeking a security, and enable HMRC to hold an online marketplace jointly and severally liable for the unpaid VAT of an overseas business that sells goods in the UK via the online marketplace’s website. (Finance Bill 2016)
VAT: Fulfilment House Due Diligence Scheme – The government has published a consultation on the ‘fit and proper’ standards that fulfilment houses will need to meet in order to operate. Fulfilment houses will have an obligation to register and maintain accurate records once online registration opens in 2018. They will also have to provide evidence of the due diligence they have undertaken to ensure overseas clients are following VAT rules. The consultation will be used to minimise as far as possible any costs for legitimate businesses.”
So, it won’t pay to get too excited just yet. We’ll keep you posted.
As far as I can tell all the laws they need to hit the sellers are already in place, and the EU says that if a marketplace is informed that a seller is not paying VAT on goods warehoused in the UK then the marketplace cannot plead ignorance. I’ve reported quite a few sellers to both eBay (pointing out that EU legislation requires them to act once they have been informed) and the HMRC fraud line. Neither of them do a damn thing. “Government just don’t work quickly” is a rather nice label for what really should be incompetent fools seeing as they already have plenty of tools to take action.
I’m currently accumulating emails from sellers with goods warehoused in the UK who say they can’t provide a VAT receipt. When I have 50 or so of them I’ll throw the whole lot at the fraud line and then share it with the media to see if anyone’s interested in monitoring them to see if any action is taken. One thing that is obvious is that it isn’t a small amount as some blind idiot at HMRC stated. The ones I have now represent 100’s of thousands of sales per year. 50 will probably be into the millions, and I’m just picking up on those that I come across when buying business supplies. The true figure must be huge.