HMRC now has new powers to tackle overseas sellers dodging VAT

By Dan Wilson September 15, 2016 - 11:55 pm

On Thursday the Finance Act 2016 came in to force. It’s the result of the UK Government Budget that was delivered by then Chancellor George Osborne earlier in the year and at first glance sounds inconsequential.

But for marketplace sellers, businesses using eBay and Amazon in particular, there are a few measures now in force that means HMRC has greater powers to tackle sellers from overseas who may be dodging their VAT obligations. We’ve covered this before in several stories and you’ll doubtless be aware of the issue.

What are the new powers?

Here’s the Government’s own summary of the new powers:

“HMRC is strengthening existing VAT legislation for directing overseas businesses that should be registered for VAT in the UK to appoint a UK-established VAT representative and giving HMRC greater flexibility in relation to when it can require some form of security.

To support this, HMRC will also be given new powers to make online marketplaces jointly and severally liable for the unpaid VAT of overseas businesses who are non-compliant with UK VAT rules and using their platforms to sell through.”

What happens next?

Amazon has made its position clear and says it has started to take action clamping down but eBay’s approach has been less transparent. Basically though, the ball is in HMRC’s court now with these enhanced powers. So we hope that they will be quick off the mark and start using them to make demands on the marketplaces and the VAT dodgers.

And don’t forget that about groups like who have worked hard to get these powers into place. You can also report offenders via their website.

What is notable, though is that there is a huge prize at stake for the UK coffers. Estimates vary but the government’s (probably timid predictions) suggest that cracking down on this could reap the Exchequer coming up to a billion quid by 2020. And that’s a tidy sum.

So watch this space, tell us what you see and hopefully this will be good news for UK sellers paying their way. But when it comes to proofs, we tend to find them in puddings.

  • glenn
    5 years ago

    lets just hope HMRC actually use these powers and dont just use them as a threat , they need to start being pro active NOW
    check all business sellers accounts on ebay/amazon not just chinese sellers , lots of UK sellers on ebay who are not vat registered and have multiple accounts

  • criticalcricketcritic
    5 years ago

    Would Tamebay be able to contact both marketplaces to see what their response is to these new measures?

    Are they going to be pro-active (Amazon have not yet) or are they going to continue to stick their head in the sand and hope this blows over so the many Chinese VAT evading sellers can merrily continue to sell and turn both marketplaces into Alibaba MKII ?

  • glenn
    5 years ago

    just as many USA fba sellers on amazon uk , have they been given warning by amazon , will HMRC ask for VAT to be back dated and paid , amazon have all there fba sales so it is pretty easy to work out what is owed
    hopefully HMRC is a sleeping giant and has finally woken up , but HMRC track record over the last 4 years has me worried to be honest

  • Great news indeed!! Hope sellers cannot escape anymore from paying VAT in future. Wondering why eBay hasn’t declared any news about this officially. Let’s see how its gonna work

  • Ashton
    5 years ago

    Just a shame that Chinese Sellers which have many ebay accounts belonging to one person which are:


    These accounts are all now registered VAT however what they are doing is using Hong Kong PayPal accounts to channel all their uk sales which still allows them to dodge the VAT and TAX. How can this be justified?

    • glenn
      5 years ago

      its a joke , 21st century and we have all this computer technology and this basic fraud still goes on , worst to happen to HMRC was that stupid woman lin homer to take over in 2011 , her and david gauke live in another world , 3 months with a 100 HMRC inspectors checking all ebay/amazon business accounts and access to paypal/amazon payments this could be 95% solved , after 1 week these HMRC inspectors would be pros how these faudsters work and be totally shocked to the extent of the fraud

  • 5 years ago

    This news just seems too good to be true, it’s as if the many downtrodden UK sellers are actually writing the legislation. Let’s keep our fingers crossed that they act, and soon.

  • john
    5 years ago

    does this HMRC new powers to tackle overseas sellers dodging VAT, applies to EU sellers or just non-EU sellers?


  • ifellow
    5 years ago

    The problem of tax avoiding, off shore fulfilment loading sellers is still rife.

    I think the time for rejoice will be when there are no longer 3 or 4 on the first page results on ebay, amazon and google shopping.

    To put it mildly this problem isnt exactly hidden.

    • Jody
      5 years ago

      Exactly, its like a smack in the face with a big wet salmon.

      They are blatantly obvious, they don’t care though as they know nothing will happen. Amazon wipe their hands clean and state its not there problem.

      And HMRC haven’t even turned on the lights on at the VAT office, they been sitting in darkness for the past 10 years.

      Meanwhile the vat dodgers are like:

      “Hey everyone look at me I’m doing 2000+ Amazon feedback a month and have a dodgy VAT number, what you going to do about it……..”

  • Jody
    5 years ago

    Well lets see what happens, progress at a snails pace. Amazon, Ebay and HRMC could easily work together and make a big impact/statement by actually doing something.

    Lets just say they agreed to verify VAT numbers ( only takes a few seconds on the VIES website). They could collaborate and get a team together spend a few weeks or so to verify VAT numbers..

    No need for costly investigations at this stage, if your VAT details are fake, don’t match or belong to someone else then you have 14 days etc to fix it or you will be suspended.

    HMRC can then choose how they progress with regards to actual investigations. And the genuine Tax & VAT abiding online sellers may actually have a fair market to compete in.

    Its all about sharing and collaborating together…………..

    • Steve
      5 years ago

      Its far easier than manually checking each number they could just use the API and code a validation script and close down all the ones that fail until the accounts are verified

    • ifellow
      5 years ago

      As highlighed by the poster above, A start would be checking vat numbers that are actually registered, whom they belong to and if they are actually paying tax.

      Rather than simply putting more numbers into the system which will pay nothing.

    • glenn
      5 years ago

      they need to verify the vat numbers and also check the sales match there actual gross vat returns , amazon/ebay could easily feed the sales and the vat numbers assosicated with that acount into a HMRC channel , im sure if you have £600,00 turnover for 3 months but only actually pay £5000 in vat , alarm bells should start ringing for that account , i fear this will be the next scam , chinese companines paying a small amount in vat just to keep hmrc off there back and send the rest of the sales straight to china

    • Ifellow
      5 years ago

      TBH I’d doubt many would even pay that, the Chinese mentality of the average small to medium sized business would very much not get the concept of paying taxes outside china.

      It would seem to much of a waste of money to them.

    • glenn
      5 years ago

      your probably right , you can get executed for it in china , shot in the head so it does not damage your vital organs , these are then sold on the black market , if below is correct

  • david
    5 years ago

    these are the only 2 cases i know of vat fraud prosecution by HMRC

    the mail lite boxes in the shower cubicle does make me laugh , selling that much he didnt have time to wash

  • mike
    5 years ago

    HMRC should be made into a bbc comedy with some frank spencer/david brent character in charge , , arguing over who didnt bring the milk in for the tea and who ate all the digestives instead of doing there real job they are paid for out the public purse chasing blatant tax cheats

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