The government has just announced in the Autumn statement the Implementation of the Fulfilment House Due Diligence Scheme in 2018 to tackle VAT fraud by overseas businesses selling goods via online marketplaces.
Lets hope Amazon Fulfilment will be held liable of all VAT Fraud being committed from its warehouses. Amazon “Should have known or would have known!!!”
In addition to that the government have given Customs and excise officers new powers to inspect goods.
Amazon have just updated their Review policy on Amazon UK & EU. No more free giveaways in exchange for a review.
Chinese Seller using this technique to boost their product ranking and sales. Seem’s like Amazon are taking review manipulation seriously. Shame they don’t take VAT Fraud seriously.
Since Amazon’s announcement yesterday it seems that the mass of Amazon Review Facebook groups have already found a way round the new rule:
The Rt Hon David Gauke MP announced that online VAT fraud accounts for up to £1.5billion of the total VAT gap. However it’s costing a lot more than that; £1.5billion of evaded VAT equates to £7.5billion in lost sales revenue for UK companies.
These UK companies are the ones funding HMRC and paying the £2.4 million pension pot for the most useless ex CEO of HMRC ever; Lin Homer.
The missing £7,500,000,000 is ending up in Chinese bank accounts without any VAT being paid. It’s also completely disappearing from the UK economy with no benefit to anyone other than the VAT Evaders and Amazon & eBay shareholders who are profit from vat fraud.
Further to our report yesterday. It seems Amazon have sent out a second letter warning Chinese sellers to register for VAT.
This news article on was published on the 1st November 2016 on Chinese website www.ebrun.com.
We’ve used Google to tranlate it:
Amazon second letter VAT warning letters you received it?
Some interesting news coming out of Chinese News Networks. Seems the latest eBay News Announcement on VAT compliance for overseas sellers is being picked up in China now.
Chinese News website www.ebrun.com has just (November 15th 2016) published this eBay sellers Note: Failure to follow the rules of VAT account will be frozen.
Today Amazon published new headlines in Amazon Seller Central about the VAT Regulations for Online Marketplaces. It seems the net is closing on VAT Evaders.
We are hoping this is a sign that HMRC are now taking action against the sellers and issuing take down notices to Amazon.
Having campaigned about on-line VAT Fraud for the past 2 years, it’s welcome news that our campaign is finally on the political agenda and steps are being made to solve the issues.
George Osborne announced a series of measures to combat online VAT Fraud in the March 2016 Budget (starts at 13:01:35). These measures include:
It’s good to see the government has finally acknowledged the scale of the VAT Fraud. In the governments Fulfilment House Due Diligence document David Gauke MP, Financial Secretary to the Treasury is quoted:
“This abuse has grown significantly and now accounts for £1-1.5bn of the total VAT gap. These overseas traders are unfairly undercutting all businesses trading in the UK, abusing the trust of UK consumers and depriving the government of significant revenue.”
However, looking through the proposed changes to the law we have some serious misgivings regarding some of the measures.
HMRC has shown a woeful lack of understanding of the scale and risk of VAT fraud now being committed by Chinese and Non EU NETPs on eBay and Amazon.
In July 2014 we handed our detailed report to HMRC VAT Fraud Team and Lin Homer, the CEO of HMRC. We were extremely disappointed to receive a standard letter from Lin Homer asking us to “report anyone we suspected of VAT fraud to the VAT Fraud Team.”
Her response indicated that not only had she completely missed the point of the report, which was to reported several hundred VAT evading sellers, but more importantly to highlight the scale of the problem which was being ignored and mushrooming out of control and was cost the UK £billions in lost revenue.
It is only recently that HMRC have started to take any action against the VAT evading sellers in our report.
From 1 December 2012, all Non-established taxable persons (NETPs) (HMRC VATREG37000), supplying goods located in the UK are required to register for UK VAT when they make their first supply of goods or services here, regardless of the value. There is no VAT threshold (HMRC VATREG37050)
In 2012–13 there were 612 NETPS registered with HMRC, making retail sales via mail order or the Internet and were responsible for net VAT receipts of £44.8 million (House of Commons – Written evidence from HMRC – Annex A – Point 3).
NETPs register for VAT with HMRC’s specialist NETP Unit based in Aberdeen.
NETPs know eBay and Amazon do not enforce EU Distance seller regulations and will not take any action against them if they break Distance Selling Regulations or commit VAT Fraud, even when it is reported.
NETPs also realise that HMRC has so far taken no action against them. This has opened the floodgates for NETPs to commit VAT Fraud.
Because eBay and Amazon do not enforce EU distance seller regulations, there are several techniques NETPs and fake companies are using to trade illegally without charging VAT:
Please note this list of sellers was complied in 2014. Some of the eBay accounts may have closed now. Make of it what you will…
The official term for businesses from outside the UK, who are warehousing and dispatching goods from the UK to customers in the UK is Non-established taxable persons (NETPs).
From 1 December 2012, all Non-established taxable persons (NETPs), supplying goods located in the UK are required to register for UK VAT when they make their first supply of goods or services here, regardless of the value. There is no VAT threshold.