Vat Evasion on Amazon by Chinese sellers


#1

I have just read this in The Times

HMRC relies on amateurs to fight VAT fraud
Oliver Wright, Policy Editor
October 12 2017, 12:01am,
The Times
HMRC has an annual budget of £22.5 million to tackle VAT fraud, which its figures suggest costs the taxpayer £1.5 billion a year
HMRC has an annual budget of £22.5 million to tackle VAT fraud, which its figures suggest costs the taxpayer £1.5 billion a year
STEFAN WERMUTH/REUTERS
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The tax authorities are using a website with no budget or staff to help tackle £1.5 billion of online VAT avoidance.

The vatfraud.org website, which is run entirely by volunteers, collects evidence of foreign retailers using Amazon and eBay to sell goods in the UK without paying the duty. In the past four months HM Revenue & Customs (HMRC) investigators have spent 70 hours on the website and visited it more than 1,200 times.

HMRC has an annual budget of £22.5 million to tackle VAT fraud, which its figures suggest cost the taxpayer £1.5 billion a year.

The site its staff are visiting was set up in 2015 by the owner of a small online business whose sales fell by almost half after Chinese companies started selling the same products at “impossibly” low prices online. It relies on information provided by other sellers.

The extent of HMRC’s dependence on the site was uncovered after campaigners noticed that after foreign sellers were featured on vatfraud.org their sales pages disappeared from Amazon.

When they investigated, the people running the site discovered that computer internet addresses linked to HMRC were by far the biggest users, spending more than 170 hours on vatfraud.org over thousands of sessions.

Of the top 20 page views by HMRC, nine were case studies of VAT fraud involving sellers that have since been taken down by Amazon and eBay.

The analysis also showed that the taxman had started using the site after government auditors began investigating HMRC itself over whether it was doing enough to tackle the fraud. HMRC usage also fell markedly during the general election campaign this year.

Richard Allen, from the campaign group Retailers Against VAT Abuse Schemes, said that while they were pleased that tax investigators were taking their work seriously, they were concerned that it appeared to have taken an inquiry by the National Audit Office to prompt HMRC into action.

“There is nothing that we have done that could not have been done by them,” he said. “There is still much more they should be doing.”

This year MPs were told that Amazon stocked, dispatched and collected the money from products sold by 23,000 non-EU companies from its British warehouses, many of which were suspected of avoiding the 20 per cent tax.

Amazon does not require its sellers to have valid VAT numbers posted on the site, but the company says it fully cooperates with HMRC by removing sellers suspected of not complying with VAT rules.

An HMRC spokesman said: “It is right that we use all intelligence and information available to us to make sure everyone is paying their fair share. We introduced tough new rules last year allowing us to hold online marketplaces liable for unpaid VAT by overseas sellers and since then we have seen a ten-fold rise in the number of sellers registering for VAT.The new reforms will secure an extra £875 million tax.”


#2

It’s good that there going after them but it beggars belief that they have had access to this information for so many years and there only taking action after they have been hounded by other government departments. It’s all well and good that there has been a huge rise in the number of traders applying for VAT but what are the actually paying? And what are HMRC doing about uncollected taxes by these companies. My worry is by the time this does all get sorted a lot of British businesses would have gone under :frowning:


#3

I think many have registered but are not actually paying a penny yet.

There has been real progress though so hopefully we’ll keep seeing more and more VAT evading sellers disappear or we should start seeing their prices rise considerably!


#4

Articles about how Amazon & eBay are being told to do more with regards to the facilitating of VAT fraud via their online marketplaces, by non EU based sellers storing goods within the UK fulfillment centres - right across the media today in almost every daily newspaper.

Here is the BBC article:


#5

The problem with the HMRC is that they have paid off most of their experienced staff. It is far easier for them to chase after the likes of you and me, than go after the Chinese and those who are facilitating this fraud, ie Ebay and Amazon.

This HMRC mentality was driven home by a friend who worked at the (now defunct) Oil taxation Office. They would send one inspector into Shell for 2 days, yet they had a whole team working dedicated to icecream and takeaway vans.

At that (forgive me if I get the name incorrect) select committee meeting last month, the chap from Amazon said “we will pursue any seller who isn’t compliant, if we find out about them”. I am not seeing any evidence of that to date. I am seeing Chinese sellers, with massive turnover ( just look at the amount of feedback), with no VAT number. So even if we fellow sellers see this, who in Amazon do we report it too?

This is not an even playing field, how on earth can UK sellers compete - and on top of that is the reciprocal postal agreement, meaning that the Chinese don’t pay any postage.

The joys of selling…


#6

I totally agree Dee. Amazon & eBay need to be forced into this as they are not being pro-active at all, despite the nonsense they spout off about it during PAC meetings.

Hundreds, if not thousands, of VAT evading sellers have been reported to Amazon but they are not interested in being pro-active. They just keep putting out more information articles as if these sellers do not know that are evading tax!!!

Hilarious if it wasn’t so tragic for VAT compliant, tax paying sellers out there.


#7

It would seem the thing to do then is not to waste time reporting fraudsters to Amazon or HMRC, just report them to vatfraud.org


#8

Like anything HMRC they will react when they are backed into a corner. There will be progress, there just gonna take their sweet time about it!


#9

Unfortunately this isn’t limited Chinese or even overseas sellers. There are UK based sellers not VAT registered with turnover well over the threshold, who aren’t registered.


#10

If Amazon provide HMRC with the sale data from the new VAT reports (I wonder why they have been created?) then HMRC could audit those also easily.


#11

Amazon can easily see who should be VAT registered, and could block those that aren’t complying from selling. If they were that bothered anyway.


#12

We have seen 70% of our business go due to the Chinese sellers who sell at prices I buy wholesale in China for.

The Chinese manufactures themselves are selling their goods to us, but then competing directly against us.

They are not just evading vat either, they are also avoiding a lot of postage because they don’t declare a lot of their mailings.

The other thing is this, to make it look legitimate many of the Chinese sellers now register for vat, collect it from the sale, however when the payment is due to hmrc they don’t pay it.

They also register fake vat numbers or steal real numbers from other business’s, I’m afraid to say it but the Chinese have no integrity when it comes to business.

Latest news from the government is this, to tackle this fraud they are hopefully going to take vat electronically at the point of payment, so the Chinese and any other business’s who try to get away with paying will not have any choice & it can’t come soon enough.

Whether or not many UK business survive is another thing because the Chinese sellers are just cleaning up.


#13

A couple for days ago I was searching for an item on Amazon and found two identical listings of the same thing by two different sellers, both from China.

Decided to do a little investigation into the VAT numbers and company registrations…

I did a search at companies house for businesses registered at the address, which was a small semi detached property, and found over 69,000 companies registered there! All China based…

Loads traded for a year, failed to file accounts and were then struck off the register.

Having looked deeper into the accounts almost all are linked to one person…

Wonder if VAT fraud are aware of it?


#14

Please email this to vatfraud.org

They will report it to HMRC I guess and action should be taken


#15

Websites will also need to ensure that businesses operating on their site have displayed valid VAT numbers.

This is the problem, from the case above it is a valid VAT number but multiple people are using it. How can anyone monitor that if it’s being done on a huge scale. If it’s up to Amazon and eBay then I am sure that they aren’t going to pay for it, so all I can see is another hike in prices so we end up paying for them to have a department to deal with it.

Clare


#16

Yep, I will but want to delve a little further into it first.

From what I can see this is being run as a business; registering companies in bulk then informing Companies House they are dormant (a bit like the car number plate businesses), then when a punter from China wants one they register it as “active”. They trade for a year, don’t file accounts and Companies House moves to strike it off. They then register another as “active” and so on…

Very clever and an easy way to make money at our expense by failing to pay any tax and VAT!

Just hope someone takes action when I do report it.


#17

I am sure this is being run as a scam on an industrial scale. I have reported stuff like this to Vatfraud, they have reported it to HMRC and sellers have been removed.

I really suggest to contact Vatfraud.


#18

#19

Well discovered.
If nothing is done when reported, then the relevant authorities are criminals too!


#20

This is an excellent job from you and the work you must be putting in.

I guess this shows the only way to make a level playing field is to do what most people don’t want and that’s to charge VAT on all sold goods and people claim it back. I am miles away from the VAT threshold, but no matter what honest people do there’s no way the government can get all the people doing this.

When I helped out someone last year I paid emergency tax as I have this business and I just look at it as a saving account (obviously with no interest), but I know I will get back what I’m owed.

You can guarantee this isn’t the only place doing it and tbh I don’t really want to pay tax to pay HMRC to employ 1000s of people to catch these. I would much rather it be spent on other public services.

Clare