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Dissolved and Dormant companies still trading on Amazon

By Chris Dawson July 6, 2016 - 7:09 am

With the spotlight that’s been put on marketplaces in general and Amazon in specific regarding sellers (in particular Chinese sellers) who are alleged to be avoiding paying VAT and other taxes due in the UK and EU, it’s not surprising that people are casting a close eye on their competitors. Today we’re breaking the news that there appears to be further suspicious behaviour by sellers.

We have reports and personally cross checked a dozen Amazon accounts which are trading in the names of companies which are either dissolved or dormant according to Companies House.

A company previously registered with Companies House which has either been dissolved or is dormant shouldn’t be trading. It means that all of the consumer rights a customer may have are worthless and of course that any trading taking place under that company name won’t be taxed corporation tax or paying any VAT.

With Amazon, as with most marketplaces, it’s very easy to check as the company address and registration number are openly displayed on the site. It’s the work of seconds to copy a company registration number and pop it into a Companies House search to check the trading status of the company.

We don’t know for certain that tax isn’t being paid. It is of course possible that a company previously traded on Amazon and has been wound up but the seller is simply using the same account and paying tax as a sole trader or under a different company name. In this case of course the account should have had the company details updated or a new Amazon trading account should have been opened.

All we can currently report is that dormant and dissolved companies are trading on Amazon, we’re told Amazon have been notified of some of the suspicious activity that’s taking place on their site. We don’t know if UK companies are trading or if it’s sellers from overseas who are using dissolved UK companies as a trading front.

Something isn’t right though and at the very least consumers are being denied their protections under law and if they get a substandard product and try to take action against the company they believe they’ve purchased from they’ll have no recourse. Equally if a business makes a purchase they may well try to reclaim the VAT they think they’ve paid either from the wrong VAT number or be reclaiming VAT which was never paid in the first place.

Whilst we won’t be naming specific details on Tamebay of businesses who appear to be trading questionable company details, we have made a test purchase from Amazon account from a company listed as dormant by Companies House just to see what invoice details may be supplied. We’ll report back as soon as we receive the goods.

Edited to add:

We’ve had one Tamebay reader contact us to say that they have registered a company name in case at some point they wish to go limited and are simply reserving the company name for such an eventuality. We totally understand this, but the businesses referred to above went further than this in listing the company registration number as the merchant of record on Amazon.

  • Alex
    1 year ago

    I recently closed my company and now operate as a sole trader. for tax purposes. However, due to Amazon’s tedious and incompetent verification process changing the details on my account from an LTD to a sole trader is not easy and will mean my business could be paused and I can’t afford to lose income from this as I need to support my family.

    Maybe if Amazon created a way so it is easier to convert from an LTD to a sole trader this would help with things?

  • Dave
    1 year ago

    This is very worrying for me, I sell and buy from both Ebay and Amazon, mainly high value electrical goods. I always ask for VAT Invoices once we have made a purchase and to be honest we have always been provided with one. So what will happen if one of my Invoices is from a dissolved or dormant company?

    Does this mean I cant claim my VAT back?

    • Fred
      1 year ago

      If the the VAT hasn’t been paid by the seller you can’t reclaim it.

    • 1 year ago

      Um, how do I know what another business does with its VAT return? If I have a vat receipt with a vat number I’m going to claim the vat paid.

  • glenn
    1 year ago

    I have also seen a company selling on amazon which declared itself dissolved in march 2017 but still has 200 feedback per month , i have sent the info to amazon to see if they will take action
    with amazon verification last year a lot of fraudelent companies in the uk have simply registered on companies house or as sole traders , as soon as they have got thru the amazon process they have then dissolved the company but still trade on amazon , hopefully HMRC will become aware of this problem and take appropiate action and big fines etc this year

  • Sam
    1 year ago

    Its an extremely laborious task to pass the verification when you set up a Limited company to trade on Amazon. The checks should be straightforward but it often takes weeks even months to pass this stage, often annoyed & frustrated at being asked to repeat he same steps and forward documentation that you have already forwarded to the Amazon robots. Read the Amazon Verification forum and you will find some horror stories, some may say that this good to ensure proper verification of sellers.

    Once you have passed this stage Amazon are not really interested or bothered about any further checks. Reporting serious VAT Issues to Amazon (like Invalid VAT numbers, No vat Numbers, Vat numbers that have been blatantly copied from genuine companies, or VAT numbers that belong to dissolved companies) falls on deaf ears.

    It makes a mockery out of the genuine sellers, you can report an issue that Amazon can easily verify at companies house, yet they fail to do this for you. They fail to protect genuine sellers.

    Take a look at:

    http://www.vatfraud.org/

    This lists the Amazon & Ebay selllers that have false VAT numbers or belong someone else.

    What is Amazon doing about this? Ask yourself why do Amazon fail to act on this information.

    • glenn
      1 year ago

      they do nothing , they will only take action if HMRC contact them and as we all know they are pretty useless or not bothered at what they see as small fraud , they are interested only in the £10 million + fraud with companies making large vat fraud reclaims and cigarettes/alcohol fraud

    • Fred
      1 year ago

      You could also ask what HMRC are doing about it. The answer is nothing. I’ve reported loads of companies committing VAT fraud and have yet to see one disappear.

    • Alice
      1 year ago

      Exactly Fred its a disgrace, it feels like no one is bothered. Amazon and Ebay do not seem to care and HRMC does not have the resource to Investigate anything. So there is a real big incentive to avoid paying tax/vat as you will most likely not get caught and will have a major competitive advantage by not paying tax and VAT, driving out the competition on price that is genuinely just to low to compete on for those who pay tax and VAT.

      HMRC, Ebay, Amazon etc need to talk to each other, I understand that not ever single seller can be investigated due to the resource and cost involved, but doing nothing is not acceptable.

      There needs to be a clear way of being able to report these to Amazon/ebay and they should set up an email address specifically for this so you can report it. Like they have for reporting Infringement violations, you can report infringement violations/ fake/ counterfeits using a specific email address set up for this. If a rights owner uses this to complain then the listing will most likely be removed within 24 hours.

      If you report company that is trading illegally avoiding tax & Vat and have the evidence from companies house to verify this, HMRC, Amazon, Ebay will not do anything.

  • glenn
    1 year ago

    alice like you i just dont understand HMRC , i have sent them countless emails to the top people in HMRC and hmrc have even phoned me and told me to stop reporting tax/vat evading sellers as i am putting my family in danger from revenge attacks from these sellers .

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