Brexit, Overseas Online Retailers & VAT- a disaster waiting to happen

With Brexit looming large the government needs to urgently put a plan into place and examine the effects that Brexit will have on Online Marketplaces, Overseas Retailers, Global Fulfilment, Distant Selling, Subsidised Chinese post, LVCR Abuse, VAT & the Split Payment model.

We propose that the government must:

  • Introduce VAT Split Payment model for ALL UK & NON UK online retailers.
  • Introduce a destination based VAT system for cross-border e-commerce, as proposed by the EU.
  • Scrap LVCR.
  • Stop subsidising Chinese post via UPU terminal dues.

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Copy of HMRC Notice to VAT Evading sellers taken from Amazon forum

Here is a copy of HMRC Notice to VAT evading sellers taken from Amazon forum :

Dear Sir/Madam,

New measures were introduced by HMRC for some businesses established overseas that are required to be registered for VAT in the UK. With these new measures, we may:

· direct a business to appoint a VAT representative in the UK
· require a business to provide a security to HMRC
· rule that an online marketplace provider and/or a UK VAT representative are jointly and severally liable, together with the business, for any UK VAT debts that become due.

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Amazon Notice to VAT Evading Sellers

jailHMRC & Amazon issue “GET OUT JAIL FREE CARDS” to VAT Evading Overseas Online Retailers. The card allow them to:

  1. Evade all unpaid VAT.
  2. Continue trading for 30 days.
  3. Keep their stock.
  4. Withdraw all their funds.
  5. Keep their highly ranked listings.
  6. Relist their old stock on their highly ranked listings under a new company.

Well done HMRC !*&!$$$

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Stop subsidising Chinese Retailers post via United Nations Universal Postal Union (UPU) terminal dues.

Chinese Retailer are being offered hugely subsidised postal services known as “Terminal Dues” by the United Nation’s Universal Postal Union (UPU) allowing them to sell goods including postage from China to the UK for less than the stamp would cost a UK retailer to send the same item from the UK to the same customer.

United Nations UPU class China, the second biggest economy in the world, as a Category 3 Economy along side Gabon. This entitles Chinese online retailers huge international postal discounts. Packages can be sent to the UK for less than a penny. And it’s the UK mail service and the cost of our stamps that picks up the tab.

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HMRC handed out 7,185 VAT numbers to Overseas Online retailers!!

HMRC have just released a press statement “HMRC tackles online VAT fraud in time for Christmas. They have handed out 7,185 VAT numbers to Overseas Online retailers in the last year, that’s a tenfold increase in last year’s figures of 695 due to their crackdown of Online VAT Fraud.

However reading between the lines is seems to be desperate attempt by HMRC to get some positive PR and be seen doing something positive in tackling the online VAT fraud they have ignored for the past ten years. The press release simply proves Online VAT fraud is enormous with 7,185 previously unregistered overseas retailers deciding to register for VAT.

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Amazon launches new VAT Compliance Tools for VAT Evading Sellers

Amazon UK have now taken measures to help VAT evading sellers understand what VAT compliance is and whether they need to register for VAT.

They have teamed up with KPMG who have provided an online “VAT registration litmus test“.

We tested the tool and there seems to be some flaws in it. It doesn’t work for NON EU companies (Chinese) with EU stock as it doesn’t ask where your business is located. It also says that you need to hit the VAT threshold before registering for VAT. There is no VAT threshold for NON EU companies. We find the tool completely confusing to use with a very badly designed results page. Hope KPMG are better accountants than web developers.

Perhaps they should think about renaming it from “VAT registration litmus test” to “VAT registration ambiguity test”!!

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Autumn statement tackles VAT Fraud via Fulfilment Houses

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.

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Amazon UK bans incentivised reviews

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:

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£7,500,000,000 in lost revenue for UK companies, due to the online VAT Fraud that HMRC are failing to stop

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.

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eBay Announcement on VAT compliance for overseas sellers is being picked up by Chinese News.

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.

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Budget March 2016 – Our Response

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.

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YOTOOL LTD, LL TRADER LTD & WUIHANGWAN TRADE CO – Still Trading

We reported this seller to HMRC VAT Fraud team in 2014. They have now closed down all their accounts and re opened under a new identity WUIHANGWAN TRADE CO., LIMITED, evading all their unpaid VAT and having no stock seized by HMRC – great work. Where is the justice in that HMRC?

HMRC has gifted this seller at least £5,000,000 in unpaid VAT so far. That’s 21% of the total £22.5m budget HMRC have allocated to tackle this fraud over the next 5 years.

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