Taxman’s £585m crackdown on unpaid VAT from online sellers including Amazon and eBay
- Officials have sent VAT bills directly to foreign sellers who target British customers
The taxman is chasing Amazon, eBay and foreign sellers who use online marketplace sites for £585million in unpaid VAT, The Mail on Sunday can reveal.
The bounty would represent a major haul for HM Revenue & Customs after years struggling to extract tax from online firms such as Amazon and eBay and people who use these sites.
Officials have sent VAT bills directly to foreign sellers who target British customers. In other cases, they have sent the demands to the online marketplaces.
Battling: The taxman is chasing Amazon, eBay and foreign sellers who use online marketplace sites for £585million in unpaid VAT
HMRC is chasing the cash under a crackdown launched in 2016 over fears foreign sellers were undercutting British rivals by failing to add VAT to the price of goods.
Companies with a turnover of more than £85,000 a year have to register with HMRC and pay VAT of 20 per cent on goods sold online.
New rules introduced in 2016 give HMRC the power to bill online marketplaces if sellers on their sites evaded tax.
Figures obtained by The Mail on Sunday show the rules prompted 78,000 firms to register for VAT between March 2016 and July 2019.
These sellers have admitted to owing £315 million between them and have been targeted directly by HMRC with demands to pay up.
HMRC has separately identified £270million of unpaid VAT on goods sold by sellers who have failed to register. It has sent 8,800 letters to websites such as Amazon and eBay asking them to pay up – or get the unregistered vendors to do so.
An HMRC spokesman said: ‘We continue to use all powers available to ensure overseas online sellers act on a level playing field with those based in the UK.’
The tough rules were introduced in 2016 after MPs said online retailers were ‘turning a blind eye’ to those skirting around the VAT system.
Rules: New rules introduced in 2016 give HMRC the power to bill online marketplaces if sellers on their sites evaded tax
Thousands of foreign firms selling on internet auction sites are still thought to be operating without a VAT number. Campaigners say tougher rules would bring in even more money for the Treasury.
George Turner, at TaxWatch UK, said: ‘There needs to be a change in policy to ensure online platforms like Amazon collect VAT on all sales to UK-based customers, regardless of where the seller is located.
‘VAT fraud is devastating to legitimate British businesses.’
An eBay spokesman said: ‘We have no tolerance for vendors who fail to comply with their VAT obligations on our marketplace. We will continue to support HMRC in its efforts to ensure a fair and level playing field for businesses.’
An Amazon spokesman said: ‘Amazon was the first signatory to the Government’s voluntary co-operation agreement to drive HMRC collection of these taxes owed. We’ve also introduced low-cost and simple tools for third-party sellers to register, report, and remit VAT.
‘In the UK, we estimate the Government has collected more than £1billion in VAT receipts from the proportion of UK sales in Amazon stores that are subject to UK VAT.’