Amazon & eBay sellers' VAT fraud rife despite crackdown

[Saving For a Space Ship]

 Amazon and eBay sellers' VAT fraud rife despite crackdown

https://www.theguardian.com/business/2016/nov/28/amazon-ebay-sellers-vat-fraud-ipads-tax-free

 

Quote

. Months later, the then chancellor George Osborne gave tax inspectors new powers which he said demonstrated “firm action to protect the UK market from unfair online competition [from overseas VAT evaders]”.

Under the new rules, HMRC now has the power to issue Amazon and eBay with warning notices about suspected VAT fraudsters using their sites. If they then fail to take action, Amazon and eBay can be held liable for any VAT that later goes missing.

In reality, however, these changes have had little impact and VAT evasion remains widespread. A spokesperson for VATfraud.org, a campaign group set up by UK-based sellers, said: “Despite the new laws, HMRC have shown a woeful lack of action. There are many fraudsters who were reported to HMRC years ago but are still trading, and evading VAT, today.”

Guardian investigations found Amazon even offering extensive support services at its British warehouses to overseas sellers that were doing little to mask their VAT evasion.

As well as advertising these sellers’ goods on Amazon.co.uk, it holds items in Amazon UK warehouses, arranges delivery to addresses across Britain, and deals with complaints and returned goods.

Amazon warehouse staff even offer gift-wrapping services on behalf of the fraudster sellers.

 

Edited November 28, 2016 by Saving For a Space Ship

[TheCountOfNowhere]

It's odd that no one considers taxaton, per se, as the fraud.

[iamnumerate]

5 minutes ago, TheCountOfNowhere said:

It's odd that no one considers taxaton, per se, as the fraud.

True, we could of cause get rid of VAT (easily avoided/defrauded) with higher taxes on something big and visible which can't be hidden.

[Saving For a Space Ship]

4 minutes ago, TheCountOfNowhere said:

It's odd that no one considers taxaton, per se, as the fraud.

 

, That's a different debate IMO

[gibbon]

While VAT fraud should be stomped out I think if you're a UK business who only deals in reselling Chinese tat via eBay/Amazon instead of complaining about Chinese manufacturers/sellers who sell exactly the same thing cheating they should instead be looking for a new business model. Boohoo the big bad Chinese in collusion with Amazon and eBay are deciding to cut out the middleman who adds zero value.

[Saving For a Space Ship]

7 hours ago, gibbon said:

While VAT fraud should be stomped out I think if you're a UK business who only deals in reselling Chinese tat via eBay/Amazon instead of complaining about Chinese manufacturers/sellers who sell exactly the same thing cheating they should instead be looking for a new business model. Boohoo the big bad Chinese in collusion with Amazon and eBay are deciding to cut out the middleman who adds zero value.

Unfortuneately, it's not just tat & it's not just the Chinese..& it's not just ebay & Amz

 

 "This “Factory Asia” now makes almost half the world's goods" 

http://www.economist.com/news/leaders/21646204-asias-dominance-manufacturing-will-endure-will-make-development-harder-others-made

Edited November 28, 2016 by Saving For a Space Ship

[Arpeggio]

This is killing UK business. Can't compete on price with a competitor who has a 20% advantage from not charging or paying VAT. Costomers go for the cheapest deal so it's even worse.

[One-percent]

Does the typical fleabayer gross enough to register for vat?  83k

 

Im giving up the day job

[Saving For a Space Ship]

2 hours ago, One-percent said:

Does the typical fleabayer gross enough to register for vat?  83k

 

Im giving up the day job

How dare you! 

Ebaying's one of the only industries this countries got left 

[durhamborn]

3 hours ago, One-percent said:

Does the typical fleabayer gross enough to register for vat?  83k

 

Im giving up the day job

I used to get up to the limit in four/five months and knock off for the rest of the year.Even those four/five months i used to hold back sales quite a lot.I could of easily got to £300k turnover,probably more, as a one man band,but i didnt bother because of VAT and not having the stomach to be sat on so much stock if anything went wrong (like Ebay closing your account) so i simply stopped when getting close to the limit.Plus i always knew it would get harder and harder so kept it where i could sell everything off and jack in within 5 months.

Now im pretty much down to a few hours a week work and the income tax allowance in profit.Its very very hard now to make a decent amount unless you have thousands of items.The Chinese sellers import and under state the value of the containers so avoiding a lot of import duty and VAT,then of course avoid all the VAT on the sales they should be paying.They sell at a tiny profit that would be a big loss for UK sellers and wait until no UK sellers are left.Their only competition then is other Chinese sellers also doing the same things.I cant see there being any smaller UK sellers left in another couple of years.Amazon isnt as far down the road,but its getting there as well.If your a British worker or sole trader you cant expect the government to do anything to help you.

 

 

 

[shindigger]

I bought a venetian blind off an Irish ebayer last week.

Arrived in full on Amazon packaging and labelling.

Not the first time i've thought "thats odd" and then gone quietly about my business.

[malk]

21 minutes ago, durhamborn said:

I used to get up to the limit in four/five months and knock off for the rest of the year.Even those four/five months i used to hold back sales quite a lot.I could of easily got to £300k turnover,probably more, as a one man band,but i didnt bother because of VAT and not having the stomach to be sat on so much stock if anything went wrong (like Ebay closing your account) so i simply stopped when getting close to the limit.Plus i always knew it would get harder and harder so kept it where i could sell everything off and jack in within 5 months.

Now im pretty much down to a few hours a week work and the income tax allowance in profit.Its very very hard now to make a decent amount unless you have thousands of items.The Chinese sellers import and under state the value of the containers so avoiding a lot of import duty and VAT,then of course avoid all the VAT on the sales they should be paying.They sell at a tiny profit that would be a big loss for UK sellers and wait until no UK sellers are left.Their only competition then is other Chinese sellers also doing the same things.I cant see there being any smaller UK sellers left in another couple of years.Amazon isnt as far down the road,but its getting there as well.If your a British worker or sole trader you cant expect the government to do anything to help you.

 

 

 

Plus there's little to no scrutiny on the quality/safety of the product. We're not only not bothering to collect the duty and VAT owed but we're also screwing over our own manufacturers by not checking safety standards are met (I've seen hilariously bad faked CE marks etc.) allowing massive ecological degradation just out of sight and also turning a blind eye to slave labour.

I'd love to see a slave labour or screwed economy tariff introduced.

[durhamborn]

Just now, malk said:

Plus there's little to no scrutiny on the quality/safety of the product. We're not only not bothering to collect the duty and VAT owed but we're also screwing over our own manufacturers by not checking safety standards are met (I've seen hilariously bad faked CE marks etc.) allowing massive ecological degradation just out of sight and also turning a blind eye to slave labour.

I'd love to see a slave labour or screwed economy tariff introduced.

Very true.The Chinese sellers have no interest in the customers.They are simply dumping their products the same as they dump steel.Its a wonder they havent bought Felixstowe port yet because they own several huge warehouses there,all full of VAT fraud goods from hundreds of Chinese sellers.Sorted there and sent to Amazon warehouses or front company warehouses close by.

[This time]

13 hours ago, shindigger said:

I bought a venetian blind off an Irish ebayer last week.

Arrived in full on Amazon packaging and labelling.

Not the first time i've thought "thats odd" and then gone quietly about my business.

I had that once. The item I bought was cheaper on Amazon but I bought it from Ebay because there was a Nectar point deal on that made it cheaper overall (I think it was if you paid with Nectar points you got half the value of Nectar points back or something). The seller was clearly just listing things he didn't have then ordering them from Amazon if anyone bought. Bit cheeky but in my case everyone did well out of the deal. I might message him with requests if Ebay does that deal again.

[Ash4781]

http://europa.eu/rapid/press-release_MEMO-16-3746_en.htm

Proposed VAT changes. Although whether they will apply to the UK in the end who knows. Reading through the press release the VAT fraud seems pretty big business!

 

Quote

The removal of the current exemption from VAT for imports of small consignments from outside the EU, which leads to unfair competition and distortion for EU companies;

 

Small consignments imported into the EU that are worth less than €22 are currently exempt from VAT. With around 150 million parcels imported free of VAT into the EU each year, this system is open to massive fraud and abuse, creating major distortions against EU business. Firstly, EU businesses are put at a clear disadvantage since unlike the non-EU businesses they are liable to apply VAT from the first eurocent sold. Secondly, imported high-value goods such as smartphones and tablets are consistently undervalued or wrongly described in the importation paperwork in order to benefit from this VAT exemption

 

Edited December 2, 2016 by Ash4781

[Dorkins]

6 hours ago, Ash4781 said:

http://europa.eu/rapid/press-release_MEMO-16-3746_en.htm

Proposed VAT changes. Although whether they will apply to the UK in the end who knows. Reading through the press release the VAT fraud seems pretty big business!

 

Is it big business? 150m parcels x €10 per parcel = €1.5bn, divide that by 500m EU citizens and it's €3 per capita per year. 20% VAT on that would be €0.60 of VAT per capita that governments are losing out on each year.

Edited December 3, 2016 by Dorkins

[Ash4781]

9 hours ago, Dorkins said:

Is it big business? 150m parcels x €10 per parcel = €1.5bn, divide that by 500m EU citizens and it's €3 per capita per year. 20% VAT on that would be €0.60 of VAT per capita that governments are losing out on each year.

yes 5bn euros in the non-compliance I think what caught my eye was " A recent study based on real purchases found that 65% of consignments from third countries were non-compliant with EU VAT rules. It is also estimated that up to €25 billion of non-EU trade is non-VAT compliant.  " 

[ChewingGrass]

VAT is the stupidest tax ever and totally unsuited to a 'globalised' world although it does prop up the economies of small islands who sell stuff that fits through letter boxes.

16 hours ago, Ash4781 said:

The removal of the current exemption from VAT for imports of small consignments from outside the EU, which leads to unfair competition and distortion for EU companies;

So the answer is more beauracracy for small businesses to protect EU ones from competition where they are uncompetitive becasue of VAT. Surely the answer is to scrap VAT altogether and think of something more suitable to the way the world works in the 21st century.

Its the EU that created this distortion in the first place as it is effectively the tax they dreampt up themselves to replace such things as 'luxury taxes' and purchase tax that was introduced in October 1940 as a war measure and replaced in 1973 as mandated by EEC membership.

[Dorkins]

3 hours ago, Ash4781 said:

yes 5bn euros in the non-compliance I think what caught my eye was " A recent study based on real purchases found that 65% of consignments from third countries were non-compliant with EU VAT rules. It is also estimated that up to €25 billion of non-EU trade is non-VAT compliant.  " 

These are all minuscule amounts. The EU has a GDP of €17tn. Billions or tens of billions of euros are in the 0.01-0.1% of GDP range.

[Saving For a Space Ship]

The Uk businesses campaign is actually listing the alleged fraudster details to see if HMRC  / Amazon remove them. Most appear still live 

http://www.vatfraud.org/amazon-sellers/

Campaign against Chinese and NON UK companies committing £billions in VAT Fraud on eBay & Amazon

http://www.vatfraud.org

 

 

[Saving For a Space Ship]

 "they don't like it up 'em !"

Quote

Hello everyone,

I am a chinese seller on Amazon. I've received few mails from HMRC. I didn't responded them at first, and now they keep sending the mail to register VAT on UK.
Please tell me that not only me receive the mail from HMRC.......
Have you responded them? And what do we actually need to do about it?

At first I though it was only a phishing mail...

Need your help in argent.

https://sellercentral-europe.amazon.com/forums/thread.jspa?threadID=136905&start=0&tstart=0&sortBy=date

https://sellercentral-europe.amazon.com/forums/thread.jspa?threadID=136905&start=15&tstart=0&sortBy=date

Quote

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.

You can find more information on the New Measures by visiting www.gov.uk and searching for ‘overseas businesses using an online marketplace to sell goods in the UK’.

I now require you to read the attached letter and register for UK VAT. Can you please notify me by 16 February that this has been done and provide me with a copy of the reference 

I also wish to review the following business records

· Annual accounts and bank statements
· Books of account: sales and purchase daybooks, cash books, petty cash books and ledgers
· sales and purchase invoices
· A brief overview of the business and its main activities to include when the business commenced and when it started to sell goods within the UK market. 
· Import Records 
· Completion and return of the attached Import Questionnaire

Should you wish to discuss this with a member of the online selling complaince team, as postal communications can take some time, you may prefer to correspond by email. Of course, there is no problem if you prefer to correspond by post in relation to this matter and I will assume this to be the case if you do not respond to this email. However, if you would prefer to correspond by email, HM Revenue & Customs requires a director of the company to confirm in writing that they understand accept the risks involved in using email. It is important that you have assessed the risks of using email to send information or to receive it. If you use email to send HMRC information, you do so at your own risk.

HM Revenue & Customs takes the security of personal information very seriously and recognises that it has privileged access to data, which we endeavour to protect. Therefore, in order for us to respond to any queries by e-mail, we need to obtain written confirmation that the director.
Has no objections to corresponding by email (if this includes agents or representatives – please specify), and
Understands and accepts the risks associated with e-mail, and
Has no objections to us sending information concerning the details of the company 

HM Revenue & Customs will de-sensitise information wherever possible (e.g. quoting only part of unique reference numbers) and we are happy to discuss how you may do the same but still provide the information we need. However, if you would prefer us not to respond to your enquiries by email (e.g. because other people have access to your email account) we are happy to respond by post. For further information see: HMRC Privacy Policy

Therefore, if you accept the security risk and wish to correspond by email, please reply to this email advising that, although you are aware that email correspondence is not secure, you wish to use it. That will then give me authorisation to provide full details of my enquiry by email. Please note the email capacity has been limited to 8mb. Therefore, if the information to be supplied is more than this, separate emails, each less than 8mb, will be required.

General information regarding UK VAT can be found on our website, at www.gov.uk/hmrc

Kind regards

On Line Selling Compliance Team

 

Edited February 15, 2017 by Saving For a Space Ship

[onlyme2]

If HMRC are worried about tax evasion and looking to minimise tax losses they should be writing to Amazon and asking fro the appropriate details of the volumes of sales in the UK and applying tax proportional to amazon global volume/profits accordingly., rather then letting them book profits wherever they feel they can get away with the least tax.

[Saving For a Space Ship]

I think this probably deserves it's own thread. It's along the lines of the Bankers not getting prosecuted for the crunch frauds...

http://www.taxresearch.org.uk/Blog/2016/04/19/online-vat-fraud-goes-unpunished/

From last April:

" the government has admitted that not a single prosecution been made in relation to online VAT fraud in the last five years. "

 

Quote

Online VAT fraud goes unpunished

POSTED ON APRIL 19 2016

The following press release was issued by Labour Front Bench Treasury spokesperson Rob Marris MP, working in association with long term anti-VAT fraud campaigner Richard Allen, who sent it to me:

In a reply to Rob Marris MP, the government has admitted that not a single prosecution been made in relation to online VAT fraud in the last five years. Treasury minister David Gauke MP termed it a “relatively new type of fraud” – despite internet shopping having been common for more than 10 years.

Internet retail sales are now about £57 billion per year, making up about one sixth of all UK retail sales – a figure which has gone up by two thirds since 2010, and one which continues to grow rapidly.

Many of the VAT frauds involve consignments of small but relatively valuable electrical items such as tablet computers and mobile phones.  The number of small consignments arriving into the European Union from outside has gone up from 30 million in 1999 to 115 million in 2013.

The “tax gap” is the difference between the tax which is due to be paid and the tax which is in fact paid. HMRC estimates that 10.4% of the tax gap is caused by VAT fraud – that’s £3.4 billion uncollected every year. Online sales probably make up a significant proportion of this, but the government doesn’t even know …

Labour’s Shadow Treasury Minister Rob Marris MP said, “I am surprised and disappointed that there have yet to be any prosecutions for this kind of VAT fraud, despite solid evidence of its growing prevalence.  Honest retailers and small businesses are being undercut by these fraudsters. I am pleased that, after sustained pressure, the government has at last announced some measures – for example the new requirement for a non-EU based business to have a UK-established tax representative, but I am concerned that these long-overdue measures do not go far enough.  What’s the government been doing for the last 6 years whilst this problem has been growing like stink?”

Richard Allen, of Retailers against VAT Abuse Schemes, commented, “HMRC have had the information they have needed to act since 2010. This is not a difficult or complex issue given the blatant non-payment of VAT and the close involvement of major online retail platforms.  The evidence is overwhelming and the legal precedent exist for third party liability. It requires nothing other than enforcement and prosecution.

He added, “Whilst the due diligence for fulfilment operators and obligatory UK tax representation for non-UK sellers is welcome, the proposed third liability notice does not make anyone liable for any lost VAT. It is a lame duck. If anything this weakens any moral incentive they might have to prevent fraud in the first place because they only have to act if HMRC tell them to.  True third party liability should introduce a clear legal and pecuniary incentive not to facilitate VAT evasion in the same way that the offence of handling stolen goods is a very clear incentive not to handle them.”    

Rob Marris confirmed that Labour will be pressing the government to tighten its proposals, saying.  “To protect UK small businesses who play by the rules, the government must do a lot more, to enact strong measures to stamp out VAT fraud in online sales.”

I find that fact, coupled with the fact that the new laws that it is suggested will tackle this are both wholly inadequate and not-EU compliant, quite astonishing.

And then people ask me why there is a tax gap.

 

 

Edited February 21, 2017 by Saving For a Space Ship

[Fully Detached]

I think the current focus is on outlawing cash within the next 10 years or so, in which case it doesn't help the "cash is the currency of criminals" narrative if you have to admit you're prosecuting thousands of online VAT fraudsters every year.

That said, there'll come a point when they do turn their attention to this, at which point your criminals will find that cash would have been a much better option for them after all, instead of leaving bright shiny, indelible digital footprints all over the place.

[phead]

On 11/29/2016 at 1:51 PM, This time said:

I had that once. The item I bought was cheaper on Amazon but I bought it from Ebay because there was a Nectar point deal on that made it cheaper overall (I think it was if you paid with Nectar points you got half the value of Nectar points back or something). The seller was clearly just listing things he didn't have then ordering them from Amazon if anyone bought. Bit cheeky but in my case everyone did well out of the deal. I might message him with requests if Ebay does that deal again.

Its a huge business, I remember a planet money episode covering it.  They have good software to spot best selling products and just list them elsewhere at higher prices, most people really dont shop around, they just see its lower than the high street and go ahead.  The software automates the whole thing and they make millions while watching daytime TV.