Not a single prosecution been made re: online VAT fraud in last 5 yrs

[Saving For a Space Ship]

Although from 10 months ago, I thought this deserved its' own thread as quite unbelieveable !

I posted it on the related thread below 

Amazon & eBay sellers' VAT fraud rife despite crackdown

http:// www.housepricecrash.co.uk/forum/index.php?/topic/227991- amazon-ebay-sellers-vat-fraud-rife-despite-crackdown/&

http://www.housepricecrash.co.uk/forum/index.php?/topic/227991- amazon-ebay-sellers-vat-fraud-rife-despite-crackdown/&page=2

Quote

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

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

http://www.vatfraud.org/invasion-of-the-netps/

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.

 

[spyguy]

Dont want to upset the people buying all those junk gilts ...

 

[CunningPlan]

I used to buy ventolin from a firm in Vanuatu and always had to pay vat to collect the parcel. How do these guys get away with it?

Ps glad I read that back. Spell check changed ventolin to gentlemen!

[durhamborn]

1 hour ago, CunningPlan said:

I used to buy ventolin from a firm in Vanuatu and always had to pay vat to collect the parcel. How do these guys get away with it?

Ps glad I read that back. Spell check changed ventolin to gentlemen!

Easy.Ship in a 40 foot container with a false invoice from factory in China,contents cost £20k but put down as £6k so import duty an VAT only £1200 instead of £5k.Then send to a warehouse near Felixstowe ownded by other Chinese.There ship to Amazon or/and ship direct.As the seller is outside the UK they should be paying VAT on all sales,there is no £82k vat free allowance,but they pay no VAT at all.Every now and again they change accounts.Mr Lee PO box 12 Yung tang road Xiang.

I import myself and have to stay under the VAT threshold now to even compete at all.If i went over i couldnt make a profit.Doesnt bother me as i only earn the tax allowance and pack in anyway,but if i wanted to grow and employ people id have no chance.Those job are reserved for China.

[Saving For a Space Ship]

39 minutes ago, durhamborn said:

Easy.Ship in a 40 foot container with a false invoice from factory in China,contents cost £20k but put down as £6k so import duty an VAT only £1200 instead of £5k.Then send to a warehouse near Felixstowe ownded by other Chinese.There ship to Amazon or/and ship direct.As the seller is outside the UK they should be paying VAT on all sales,there is no £82k vat free allowance,but they pay no VAT at all.Every now and again they change accounts.Mr Lee PO box 12 Yung tang road Xiang.

I import myself and have to stay under the VAT threshold now to even compete at all.If i went over i couldnt make a profit.Doesnt bother me as i only earn the tax allowance and pack in anyway,but if i wanted to grow and employ people id have no chance.Those job are reserved for China.

So their fraud has the knock on effect of you staying under the vat limit to compete, so not collecting tax for hmrc, a tax income loss for HMRC as presumably you would have been vat registered if not for the fraud .

I looked at some of the chinese importers listed as fraudulant on http://www.vatfraud.org/amazon-sellers/

Many used Manchester Newsagent shop type forward mailing addresses.  Some appear to have used an HMRC office address! 

  HM REVENUE AND CUSTOMS RUBY HOUSE 8 RUBY PLACE ABERDEEN AB10 1ZPb

I have sold on ebay as a business, (luckily it's mainly vintage collectables, so not directly undercut / competing with fraudsters) 

This thread from 2013 i started , from memory did not have fraud as a general reason for the massive drop  

 Massive Drop In Online Sales For Ebay, Amazon, Play www.housepricecrash.co.uk/forum/index.php?/topic/190712-massive-drop-in-online-sales-for-ebay-amazon-play/

I worry that whole industries are under threat by this fraud. If so, why no prosecution action by HMRC ?  

 

   

 

 

 

 

Edited February 21, 2017 by Saving For a Space Ship

[Dorkins]

VAT is a bad tax and should be abolished. After the Brexit referendum everybody started panicking about tariff-free trade agreements but the UK doesn't even have tariff-free trade with itself.

[durhamborn]

1 hour ago, Saving For a Space Ship said:

So their fraud has the knock on effect of you staying under the vat limit to compete, so not collecting tax for hmrc, a tax income loss for HMRC as presumably you would have been vat registered if not for the fraud .

I looked at some of the chinese importers listed as fraudulant on http://www.vatfraud.org/amazon-sellers/

Many used Manchester Newsagent shop type forward mailing addresses.  Some appear to have used an HMRC office address! 

  HM REVENUE AND CUSTOMS RUBY HOUSE 8 RUBY PLACE ABERDEEN AB10 1ZPb

I have sold on ebay as a business, (luckily it's mainly vintage collectables, so not directly undercut / competing with fraudsters) 

This thread from 2013 i started , from memory did not have fraud as a general reason for the massive drop  

 Massive Drop In Online Sales For Ebay, Amazon, Play www.housepricecrash.co.uk/forum/index.php?/topic/190712-massive-drop-in-online-sales-for-ebay-amazon-play/

I worry that whole industries are under threat by this fraud. If so, why no prosecution action by HMRC ?  

 

   

 

 

 

 

Yes i could easily of gone to half a mill turnover if id wanted,but to do so would of meant a couple of staff and VAT.Due to not being able to compete then with the Chinese fraudsters (ie 99% of them) it wasnt worth it.The figures were something like turnover £80k make £25 k as a one man band with no fixed costs.Turn over £300k+ with two staff and VAT to compete id of been looking at £37k wage/profit and much more risk to my capital.So i didnt bother,and then semi retired instead and prefer to make £10k turning over £40k for 3 hours work a week..My capital is invested instead in blue chips paying me dividends rather than creating jobs and paying tax.

Amazon also know the fraud is killing UK companies,but they dont care,because it helps kill their competition,then they can kick all the chinese off later if they want (or up their fees).

VAT allowable earnings is far too low.It should be £250k nil band.That would let small business get to a size they can employ etc before worrying about it.I dont care of course,happier to retire at 40 instead and opt out.Our politicians are so corrupt and beyond useless nothing will change to help people who work.

[chicker]

The number of VAT collectors and local offices has been cut massively. Back in the 80/90s they had regular vat inspections for small companies.

They would arrive by bus, bring sanwiches for lunch, spend days in your office perched on a corner of a desk going through your export invoices.

Very rarely  would they find any thing of worth and just make a few recommendations of how to do your invoicing. The companies would dread the inconvenience and some would be overly nice and welcoming but others (like us) would turn the heating off and take light bulbs out. Childish in retrospect but these guys were a pain.

Then all of a sudden they were gone ...... Offices sold off and the Mighty VAT men disappeared unto  god knows where.

Basically they cost more than they earnt for the HMRC and the VAT people realised that most small offenders weren't financially worth chasing. The big VAT fraud was done by organised crime and at one time the rag trade was the vehicle for this. Most of them were supposedly bringing clothes from (you guessed it) Asia.

 

[Saving For a Space Ship]

11 hours ago, durhamborn said:

Yes i could easily of gone to half a mill turnover if id wanted,but to do so would of meant a couple of staff and VAT.Due to not being able to compete then with the Chinese fraudsters (ie 99% of them) it wasnt worth it.The figures were something like turnover £80k make £25 k as a one man band with no fixed costs.Turn over £300k+ with two staff and VAT to compete id of been looking at £37k wage/profit and much more risk to my capital.So i didnt bother,and then semi retired instead and prefer to make £10k turning over £40k for 3 hours work a week..My capital is invested instead in blue chips paying me dividends rather than creating jobs and paying tax.

Amazon also know the fraud is killing UK companies,but they dont care,because it helps kill their competition,then they can kick all the chinese off later if they want (or up their fees).

VAT allowable earnings is far too low.It should be £250k nil band.That would let small business get to a size they can employ etc before worrying about it.I dont care of course,happier to retire at 40 instead and opt out.Our politicians are so corrupt and beyond useless nothing will change to help people who work.

 

Sorry to hear that, it must make many small biz's just give up or not bother to start ..

38 minutes ago, chicker said:

The number of VAT collectors and local offices has been cut massively. Back in the 80/90s they had regular vat inspections for small companies.

They would arrive by bus, bring sanwiches for lunch, spend days in your office perched on a corner of a desk going through your export invoices.

Very rarely  would they find any thing of worth and just make a few recommendations of how to do your invoicing. The companies would dread the inconvenience and some would be overly nice and welcoming but others (like us) would turn the heating off and take light bulbs out. Childish in retrospect but these guys were a pain.

Then all of a sudden they were gone ...... Offices sold off and the Mighty VAT men disappeared unto  god knows where.

Basically they cost more than they earnt for the HMRC and the VAT people realised that most small offenders weren't financially worth chasing. The big VAT fraud was done by organised crime and at one time the rag trade was the vehicle for this. Most of them were supposedly bringing clothes from (you guessed it) Asia.

 

The irony is that Amazon & ebay have all the figures to prosecute them. If the sellers used their own websites etc, job would be a lot harder 

 Robots Will Soon Do Your Taxes. Bye-Bye, Accounting Jobs

https://www.wired.com/2017/02/robots-will-soon-taxes-bye-bye-accounting-jobs/?mbid=social_twitter

[spyguy]

Just now, Saving For a Space Ship said:

 

Sorry to hear that, it must make many small biz's just give up or not bother to start ..

The irony is that Amazon & ebay have all the figures to prosecute them. If the sellers used their own websites etc, job would be a lot harder 

 Robots Will Soon Do Your Taxes. Bye-Bye, Accounting Jobs

https://www.wired.com/2017/02/robots-will-soon-taxes-bye-bye-accounting-jobs/?mbid=social_twitter

Oh FFS!
Softwrare, not fckign robots, habe een doing tax work for 20 odd years.

Software has got to the point where, by sorting out data exchange and formats, its going to be a lot better.

The writing has been on the wall for accountants as soon as the calculator arrived in the 70s.

The legal profession is getting hammered now, as the donkey work that was used to pad the fees out is now carried out by computers. Theres few entry level jobs to allow you to earn money whilst you skill up. Look at the legal factories in Leeds - wualkify and remain stuck, earning less than 30k.

 

 

[billy budd]

Things have moved on since then though. Since September HMRC has had the power to warn sellers – and Amazon and eBay as their online hosts – that they are not complying with the rules. After this Amazon and eBay can be held directly liable, in some cases, for ongoing avoidance by fraudulent overseas sellers on their websites.

Here's a possible recent example of a Chinese seller being chased by HMRC:

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

[John51]

In the 80s I heard stories of the VAT man counting the chips on a plate in a cafe. Also measuring the used sump oil in garages. While that was going on, there were hardly any benefit snoopers. Unemployed likely lads would get something going and would come off the dole if their biz grew big enough. Even if they didn't, it circulated more cash at the bottom end.

Now, we have lots of benefit snoopers and those solely on benefits are mostly too scared to try and escape the glue trap due to Draconian penalties. Comparing claimants I know now to those I knew back then, I'd guess 'working on the side' benefit fraud is less than 10% of what it was in the 80s.

[Saving For a Space Ship]

47 minutes ago, billy budd said:

Things have moved on since then though. Since September HMRC has had the power to warn sellers – and Amazon and eBay as their online hosts – that they are not complying with the rules. After this Amazon and eBay can be held directly liable, in some cases, for ongoing avoidance by fraudulent overseas sellers on their websites.

Here's a possible recent example of a Chinese seller being chased by HMRC:

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

Fair point, but has anyone been prosecuted or ebay / az fined , or sellers banned ? 

 

Most of the culprits are still selling

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

[Saving For a Space Ship]

BINGO!!

EU could demand £1.7bn from UK after customs fraud probe

http://www.bbc.co.uk/news/uk-39206513

 

Quote

The UK is facing a £1.7bn fine after failing to stop Chinese criminal gangs using the country as a fraud "hub", despite repeated warnings.

Clothes and shoes were imported through the UK at fictitiously low values for years to avoid duties, the European Anti-Fraud Office (Olaf) has found.

As a result, investigators say the EU budget has lost millions of pounds in customs duties.

HMRC said it plans to challenge Olaf's claims about lost revenues.

The Olaf investigation found the UK to be a "significant hub" for so-called undervaluation fraud - where importers can profit from evading customs duties and related taxes.

Organised crime groups are using fake invoices to undervalue goods being imported from China - many of which are destined for the black market in other parts of the EU, investigators found.

They say the fraud has cost the EU £1.7bn in lost duties between 2013-16 and now they want the European Commission to recover the money from the UK.

In 2016, according to Olaf, 79.2% of the €817.2m (£709m) losses in customs duties for the EU budget were through UK importation.FP

Olaf have said the losses to the EU budget are on-going, as this fraud is still happening. Investigators warned HM Revenue and Customs a number of times but they failed to take tough action to curb the problem, it said.

A spokesman said: "Olaf has repeatedly drawn the attention of the UK customs authorities (HMRC) over the last years to the scale of the phenomenon and to the on-going revenue losses.

"As far as Olaf is aware, the UK authorities have not introduced risk profiles and the measures that they have taken do not appear to have curbed this traffic.

"To date, they have not initiated any criminal investigations in relation to these frauds."

He went on to say that it is the taxpayers who "pick up the tab" to compensate for the revenue losses.

But a spokesman for HMRC said: "This is not a bill, it is Olaf's estimate of evaded duty, and not one that is recognised by our experts who will be challenging Olaf on their calculations.

"HMRC has a very strong track record for tackling fraud and rule breaking of all kinds, securing more than £26.6bn last year alone and no one should be in any doubt that we are responding to the threat of fraud.

He added that HMRC is currently handling more than 550 cases relating to potential import fraud.

 

"OLAF should take a look in Amazon EU warehouses where these fraudsters hold their £billion of stock."

https://twitter.com/vatfraud  VATFRAUD‏ @vatfraud 1h1 hour ago

Edited March 9, 2017 by Saving For a Space Ship

[Errol]

On 21/02/2017 at 6:01 PM, CunningPlan said:

I used to buy ventolin from a firm in Vanuatu and always had to pay vat to collect the parcel. How do these guys get away with it?

Ps glad I read that back. Spell check changed ventolin to gentlemen!

lol. Firm in Vanuatu sell Gentlemen. We give good price. 

[onlyme2]

11 minutes ago, Saving For a Space Ship said:

BINGO!!

EU could demand £1.7bn from UK after customs fraud probe

http://www.bbc.co.uk/news/uk-39206513

 

I read somewhere that a lot of VAT on goods is charged at the point of first landing in the EU, before onward shipping to final sales point and Rotterdam being singled out as a major point that VAT was being collected. If this is true then potentially large amounts of VAT are being collected by other EU countries for goods destined fro sale in the UK and elsewhere.

 

 

[Saving For a Space Ship]

 

Edit 5 years too late !

 

Budget VAT: ‘Split Payment’ model to allow VAT to be extracted directly by the Exchequer from online transactions at the point of purchase.

https://twitter.com/vatfraud/status/839787532334350338/photo/1

• 

Edited March 9, 2017 by Saving For a Space Ship

[Saving For a Space Ship]

Selling to UK Gets Complicated with VAT Tax Changes

https://www.ecommercebytes.com/2020/12/29/selling-to-uk-gets-complicated-with-vat-tax-changes/

" we will be moving the point at which VAT is collected from the point of importation to the point of sale.

This will mean that UK supply VAT, rather than import VAT, will be due on these consignments.

“The new arrangements will also involve the abolition of Low Value Consignment Relief, which relieves import VAT on consignments of goods valued at £15 or less.

“Online marketplaces (OMPs), where they are involved in facilitating the sale, will be responsible for collecting and accounting for the VAT. "

[Saving For a Space Ship]

and so it goes on.. a national scandal, heads need to roll at HMRC / Gov  

https://www.bbc.co.uk/news/uk-wales-65205520

Cardiff flat owner gets tax bills for 11,000 Chinese firms

Published 13 hours ago

Quote

When Dylan Davies went to check his post last November, 580 brown envelopes fell to the floor.

Over the next six months he got tax bills for 11,000 Chinese companies after they fraudulently used his Cardiff address to register for VAT.

"It's been horrendous," said Mr Davies, who got letters from HM Revenue & Customs (HMRC) demanding tax amounting to £500,000.

HMRC admitted the situation did not raise alarm bells at the tax office.

"You'd think there'd be a systems with the technology today that would have picked it up immediately," Mr Davies said.

He told the police and HMRC but the brown letters just kept coming.

What does Wales sell - and who is buying?

Man takes parcel to US to beat Royal Mail ban

When letters from debt collection agencies started to arrive, he got even more worried that bailiffs may come "charging the door down" and feared that the amount of money involved meant his property could be taken.

Dylan Davies "couldn't believe" the number of brown envelopes coming each week

He said HRMC only started to take notice when he took his concerns to BBC Wales consumer programme X-Ray.

The head of HMRC admitted the problem in a letter to the Commons public accounts committee.

Permanent secretary Jim Harra said: "2,356 of the businesses have a tax debt and we have acted to prevent any further contact with this address in relation to these debts."

Mr Harra said investigations had "so far have found no evidence of fraud or fraudulent intent" and 70% of the businesses registered to Mr Davies's address operated in online marketplaces.

The law changed in Jan 2021, meaning online marketplaces such as Amazon or eBay must collect VAT from overseas traders and pay it to HMRC.

But if a company has a UK address for VAT, which it does not have to provide proof of, it is responsible for the payment.

Financial crime consultant Graham Barrow said he suspected fraudulent activity from the overseas companies.

"It looks to all intents and purposes like VAT fraud," he said.

"There's no other reason why you'd register for VAT at a complete stranger's address, particularly for 11,000 companies to do that."

He believes the firms are collecting VAT from their buyers, but not paying it to HMRC.

The bills coming to Mr Davies's flat were probably tax fraud, says financial crime consultant Graham Barrow

Mr Barrow said it "beggared belief" that HMRC did not notice the number of companies being registered for VAT at Mr Davies's flat.

He said the consequences for an individual could be severe, through no fault of their own.

"You could find that there are large numbers of county court judgements being registered to your address," he said.

Mr Davies said HMRC needed to "tighten up completely", claiming it was easier to "register a company for VAT than it is to go and get a bus pass".

HMRC said: "We are reviewing our operational processes for managing high volume address changes, including understanding any vulnerabilities in our systems associated with this behaviour."

 

[Saving For a Space Ship]

China robustly defends its citizens and businesses following revelation thousands of addresses in north used in alleged widespread VAT fraud

https://www.irishnews.com/news/northern-ireland/china-robustly-defends-its-citizens-and-businesses-following-revelation-thousands-of-addresses-in-north-used-in-alleged-widespread-vat-fraud-5BKM4QOMQ5ARXMZVLXAXTXIBTY/

and on and on 

Quote

Companies using addresses across the north, some fictitious, are trading on sites like Amazon in a suspected type of VAT fraud, said Mr Barrow.

Chinese nationals are listed as directors. The publicly available information also reveals that while many claim to be involved in online trading of goods, others are listed as selling machinery and other heavier products.

One homeowner was surprised to find her west Belfast home was listed as being involved in the possible sale of aircraft and ships.

Evidence suggests an organised targeting of the north, possibly by many groups and individuals. This evidence includes the multiple wrong spelling of street names, the use of a particular address or street by multiple companies and the timing of the filings.

The owners of homes have heavily criticised existing legislation that makes it simple for anyone to register a company without checks. All a person needs to do is to register online and pay £12.

“From March, we will use our new powers to act more quickly if people tell us their personal information has been used on the register without their consent,” a Companies House spokesman said, referring to a new economic crime law.

BBC Radio 4 - You and Yours, Is my house on the scammers list?

bbc.co.uk/programmes/m0019z2g

A special investigation: is my house on the scammers list?

Edited February 6 by Saving For a Space Ship

[Saving For a Space Ship]

From the ebay sellers forum ..a warning for sole traders 

https://community.ebay.co.uk/t5/Seller-Central/Watch-out-soletraders/m-p/7560022#M661868

Quote

Im using my non-business account to post this one, but please be careful, sole traders. I recived spam mail the other day mentioning a business at my address.

I found out later that day that, according to the company house, there is now a Pakistani registered to my address with a LTD company with the exact same name as my sole trader name.

I have been receiving letters from the company house with the log-in details and lots of spam mail trying to get this Muhammad person to open up a bank account with them. I have contacted companies House,  Action Fraud, eBay, and my bank, spending multiple hours on the phone at all these places only to be told they can move his address and hopefully it might dissolve, but I doubt it.

The only place my information was public was on my eBay profile, so these people must be checking out UK sellers and doing the same with them.

Now that my home is now on companies house, multiple websites now display the information, and my house is now lit up like a Christmas tree on Google Maps.

You can set up a dormant LTD company to avoid this, even though I might lose the brand I have been working on building since 2021.

Hopefully, this might help someone else and avoid this situation for them.

https://community.ebay.co.uk/t5/Seller-Central/Watch-out-soletraders/m-p/7560022#M661868