So HMRC is perfectly happy to crack down on individuals over their tax and VAT… but they’d prefer to leave big brands like eBay and Amazon to handle VAT fraud from undeclared goods sold online.
There is, it appears, a fast-growing number of sellers based outside the EU holding stock within the UK, who sell their wares online without a registered VAT number. Durham University tax law expert Rita de la Feria believes Amazon and eBay may end up liable for paying VAT if they’re not diligent enough and don’t ask people the right questions. She also says HMRC needs to get its act together fast, to force sellers like eBay and Amazon to keep an eye open for fraudsters who sell stuff on their platforms. But is that entirely fair, when HMRC is supposed to be responsible for collecting tax?
The answer’s no. Third parties are already legally obliged to police VAT fraud under the Kittel Principle, and since its launch there have already been a bunch of cases heard across the EU. Now the pressure is building for HMRC to take action itself.
What eBay and Amazon say
Ebay says they remind their users to comply with legal obligations as well as providing ‘helpful guidance’ on VAT. If they identify an eBay seller breaching UK VAT rules, they cooperate with HMRC as long as the revenue can provide proof of tax underpayment. Amazon says their marketplace sellers are independent businesses thus responsible for their own VAT affairs. While they also provide tools and information, they don’t have the authority to review people’s tax matters.
HMRC is well aware of the fraud taking place on both platforms, and is “actively involved in carrying out a programme of enquiries into suspect businesses and conducting intelligence research.” And it’s about much more than British VAT. The frauds affect other EU states too, and HMRC is also working closely with the European Commission and fellow Member States to tackle the issue.
Tax avoidance anger at an all time high
At the same time the British public’s anger about tax avoidance by big business is at an all-time high, and people are convinced it’s ‘widespread’. The public remain unconcinced that HMRC is doing much about it, with a study revealing 60% of ordinary people feel tax avoidance schemes are widespread. And a second survey highlighted a drop in public confidence in HMRC’s ability to catch and stop tax evaders. HMRC says avoidance schemes are actually quite rare, with only half a percent of the total UK tax revenue lost through them.
Leave the whole tax thing to us!