back to article MPs accuse Amazon and eBay of profiteering from VAT fraudsters

MPs have accused Amazon and eBay of profiteering out of companies based overseas that are fraudulently using their platforms to dodge VAT - and supposedly putting Brit SMEs out of business while they're at it. In a Public Accounts Committee hearing, MPs heard that Amazon had collected the money from products sold by 23,000 non …

WTF?

So let me get this straight

So not only is this multinational that uses complicated (but legal) tax avoidance techniques to reduce its own tax bill, it is also assisting other traders to avoid tax too (possibly illegally)?

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Anonymous Coward

Re: So let me get this straight

"Assisting" is probably stretching the bounds of english libel law, but it could certainly be reasonably said they're not doing everything they can about the issue. There's an important point glossed over in the middle of the article. These sellers aren't just selling on Amazon, they're allowing Amazon to fulfil their orders from Amazon warehouses via Amazon logistics.

So not only are Amazon permitting non-verified sellers to use their web frontend and taking a small cut, they're actively providing a full end-to-end service to that seller, including managing their stock and taking a much larger cut. They could/should know fine well where the shipments are coming from and they do know the seller hasn't submitted their VAT number - after all Amazon will be sending them invoices as well.

And yet there are still thousands of them who should be registered but aren't. And I'd bet thousands more who are registered but aren't compliant.

Amazon could simply do the reasonable thing and ban non-verified sellers. Seems sensible enough to most of us, but that obviously doesn't chime well with the west coast anarcho-technologist world view. I suspect the government would settle for Amazon simply requiring verification for access to their fulfilment services.

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Anonymous Coward

Re: So let me get this straight

not only are Amazon permitting non-verified sellers to use their web frontend and taking a small cut, they're actively providing a full end-to-end service to that seller, including managing their stock and taking a much larger cut.

True...but Amazon are a bunch of tax-dodging shysters themselves, so there's consistency right the way through the chain

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Re: So let me get this straight

No, its evasion. Thats illegal.

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Re: So let me get this straight

Amazon is not breaking the law here.

The simplest way to deal with this, rather than moaning to Amazon is to change the law.

Take the laws that currently apply to Duty Warehouses for excise goods, eg alcohol, tobacco, petrol etc; and apply those to Amazon warehouse and similar. Then Amazon would be obliged to collect VAT on the product before they release it from the warehouse and pay it to HMRC. The seller would then record on their VAT return that the VAT had been paid by Amazon, and they wouldn't need to pay it.

Optionally, the seller could be required to charge VAT on the sale proceeds less commission that Amazon pays them. Amazon would claim that as an expense on their VAT return on receipt of a valid VAT invoice or appropriate self-billing details, and the seller would record that on their VAT return as the sales income.

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Re: So let me get this straight

You don't need your customer's VAT number to send them an invoice unless you are not charging them VAT because they are VAT registered in another EU country.

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Re: So let me get this straight

>but Amazon are a bunch of tax-dodging shysters themselves

Hang on. I know it's fun to have a go at big corps, but the reason Amazon haven't (in the past) paid much tax is because they haven't made profits - they've ploughed earnings back into the business, like businesses are supposed to do.

They've recently begun to make real profits and, as far as I know, they're paying tax on it.

Knee, stop jerking.

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A bit

Late to the party. this has been going on for years and years.

Unfortunately people buy from these charlatans and get poor and in some case knock off products. And the warranty is useless too.

eBay don't even respond to complaints as long as the money keeps rolling in.

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TVU
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"MPs accuse Amazon and eBay of profiteering from VAT fraudsters"

The answer is clear. The government should address two forms of corporate parasitism.

The first is to ensure that these foreign traders pay their due taxes and making the trading corporations like Amazon and Ebay pay up for lost revenue if they won't introduce the necessary checks.

The other thing is to have a transaction tax on all multinational corporations that think it's fun and trendy to avoid paying taxes.

Tax avoidance does come with a huge cost such as less government revenue to fund vital infrastructure projects and no pay rises for essential public sector workers.

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"Tax avoidance does come with a huge cost such as less government revenue to fund vital infrastructure projects and no pay rises for essential public sector workers."

As much as I agree with your statement, no one can waste £1bn like the government. They certainly do on the other side of the pond where I live. The money will be put to much better use in people's pockets. And BTW 20% tax is outrageous.

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DJO

Normal right wing rhetoric, the Tories always say "We will not increase VAT".

Translation: "We will increase VAT at the first opportunity".

VAT is a regressive tax as it disproportionately affects people on lower incomes which is why the right wing like it.

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I like the idea of a transaction tax. That way people paying for google ads would have to pay the tax before google could run the ads at all in the EU. It's amazing that no one has implimented that kind of tax yet. The internet unlike 10 years ago is pretty mature so the reason to not tax sales on the internet is now moot since it is not in its infansy anymore. Hell the taxes for amazon alone would be huge for any country and it would be easy by just charging the tax to the country the goods are supposed to be delivered to or state. I think this would be a good thing for the brick and mortar stores that actually hire real people to man the stores every day thus improving employment in the retail sector.

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As much as I agree with your statement, no one can waste £1bn like the government. They certainly do on the other side of the pond where I live. The money will be put to much better use in people's pockets. And BTW 20% tax is outrageous.

<-- This

And, yet, people are up in arms about the state not taking enough from them!

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VAT lost to HMRC and lost to the UK

The VAT may be lost to HMRC but the money isn't lost to the UK, it's still in the pockets of the UK buyers who didn't have to pay it in the first place.

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Facepalm

Re: VAT lost to HMRC and lost to the UK

Er no, its in the pockets of the sellers.

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Silver badge

Re: VAT lost to HMRC and lost to the UK

Depends if the price was as it would have been with the VAT anyway (in which case 20% more money for the seller, but why would you buy from them specifically) or priced as if ex VAT (i.e. seller gets more profit due to more sales, but the UK consumer keeps the VAT to spend elsewhere (and 20% goes to HMRC).

The truth is likely somewhere in the middle, so 90% of the money will be escaping HMRC and the UK...

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Anonymous Coward

Re peterm3: VAT lost to HMRC and lost to the UK

No, that kind of thinking is why you are still in an entry level job.

If the VAT, which is paid by the buyer, isn't being collected, which it isn't, then the unpaid VAT is staying in the buyers pocket. The advantage to the seller of not collecting VAT is that the buyer, who is often selecting who they purchase from based on total price, is able to deliver the goods for a lower total price.

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Re: Re peterm3: VAT lost to HMRC and lost to the UK

Not as a business purchases. Amazon is a nightmare - two sellers, identical prices, but no way to determine if either is VAT registered. The seller is taking extra profit.

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Re: Re peterm3: VAT lost to HMRC and lost to the UK

The seller sells at the market price, a market containing many participants who do pay VAT. The seller is not a charity, she will sell at the market price. So any VAT which would be due stays in the pocket of the seller.

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Re: petterm3 market price

The market price does not include enough margin for VAT. VAT registered sellers cannot get down to the market price so make no sales.

Amazon had a handy tax loop hole that allowed them to avoid (not evade) VAT. The government closed the loop hole and prices went up to include VAT. Very shortly afterwards prices from dropped down again, but not directly from Amazon - only from some third party vendors. I assumed this was because those vendors were evading (not avoiding) VAT.

Clearly the British public are voting with their wallets. Perhaps if the government weren't so exceptionally skilled at wasting money the public might vote differently.

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Re: VAT lost to HMRC and lost to the UK

This is simply not true. As a regular buyer on both of these platforms the prices, particularly Amazon are similar if not identical to UK shop prices but with £0 VAT which suggests that someone is pocketing the VAT and certainly its not the punter. The big advantage is access to items that may not be easily available locally and very often "free" delivery but when you're pocketing an extra 20% then delivery is not an onerous cost.

I systematically refuse items where VAT is not shown which happens in about 50% of my potential purchases. Latest example: look at the Denon PMA-1600NE priced @ normal list with no VAT showing or available on Amazon but of course with "free delivery".

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Re: VAT lost to HMRC and lost to the UK

"Amazon are similar if not identical to UK shop prices but with £0 VAT"

I think everything I buy from Amazon has VAT specified.

Not sure Amazon should be held responsible if someone at the other end illegally then doesn't actually pay in the VAT. Is the Govt trying to offload it's tasks onto Amazon? Is Gumtree next to be targeted?

VAT on old tat? (Like when you buy used from USA and have to pay import taxes.. Sure don't get any sales taxes back from USA.. Tax, tax, tax..)

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Windows

Thatcher would have called it entrepreneurship

I think the UK has fairly soft-touch regulation. I think the EU complained we don't enforce VAT properly. It might be better to think that VAT could be only 15% if it was better enforced. Like the minimum wage, there's no point in having it unless it is properly enforced.

Being VAT registered should be compulsory to trade professionally. These are professional sellers who buy stock in just to sell it, not someone selling off the iphone they got as a birthday present!

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Re: Thatcher would have called it entrepreneurship

Not as soft as Poland! Until 2016, VAT carousels were costing billions. Strangely enough the EU never complained about it. Can't understand why and it lasted for 8 years?

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Anonymous Coward

Oh come on.

Who hasn't bought parts from the "grey" market?

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Anonymous Coward

Too simple ?

Just make VAT chargeable at the point of sale and collect from Amazon etc. The customer can recover their VAT from Amazon. It's how VAT works in the rest of the UK. It would help to reduce the national debt by charging VAT on non-UK supplied goods. Maybe it will help cover the cost of Brexit when we don't have to pay money to the EU.

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Re: Too simple ?

Even easier - if Amazon is selling it, they're responsible for charging (and paying to govt) the VAT. It would be a problem for a small minority of sellers, but there are very few private sellers on Amazon any more.

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Holmes

Re: Too simple ?

I think the problem is Amazon with marketplace see themselves as a broker, the sale contract is with the seller. This is how Uber works - the drivers are often below the VAT registration threshold. If Uber was the supplier they'd be over the threshold and have to charge VAT

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Re: Too simple ?

The difference between Amazon and Über is that Über sets the price, specifies the level of service to be provided, and doesn't give customers a choice of which driver to go with.

Amazon lets the seller set the price, allows them to sell pretty much whatever they want on the website, and lets customers choose which seller to buy from. I might choose to buy from a more expensive seller if they have a better satisfaction rating for example.

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Bronze badge

Re: Too simple ?

Correct, @peterm3. Amazon is the fulfilment partner. They hold the stock. The contract is with the third-party seller.

That said, if Amazon itself has stock, I prefer buying from them because the VAT *is* paid. Third-party suppliers are the scourge of the system.

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Re: Too simple ?

"I think the problem is Amazon with marketplace see themselves as a broker"

It's not a problem. Unless you are the state wanting to control all the money all the time.

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Re: Too simple ?

"Third-party suppliers are the scourge of the system."

Not tarring all with the same brush at all then?

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I avoided VAT just last month

Bought a Samsung Galaxy S8 for the missus. Ordered through a 3rd party seller on Amazon UK. Paid roughly 17% less than the version sold by Amazon themselves. Ordered on Saturday, dispatched same day, received the following Wednesday. No mention of VAT on the receipt.

It is trivially easy to evade VAT in this manner; and it's obviously not illegal. The government does need to change the law to create a level playing field for both domestic and overseas sellers.

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Re: I avoided VAT just last month

"and it's obviously not illegal. "

Really - I'm sot sure it's that obvious.

Pretty sure that if I pay cash for someone to do some work and get it 20% off then I am breaking the law as well as them...

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Re: "and it's obviously not illegal"

He'll find out if it is illegal (or not)when he is woken up at 04:00 one morning when HMRC force entry to his house and get thir missing VAT back with interest.

IMHO, HMRC should start surcharging Amazon and EBAY for the unpaid VAT. They'll either come into line or quit the country.

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Re: I avoided VAT just last month

It is not illegal if you have a permanent establishment in the UK and total sales in the year are less than £85,000, or if you are selling from a permanent establishment in another EU country, and your sales to the UK are less than £70,000 (but you have to then comply with the VAT laws in the country you are selling from).

Your shelf-space in an Amazon warehouse counts as a permanent establishment.

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Anonymous Coward

Simple fix, ban Amazon from selling goods in UK

Simple fix, ban Amazon from selling goods in UK

That way they will make sure all the legal rules are applied. Once all is legal they can start selling again.

Multi nationals should be treated the same way as any small company that has to follow the laws.

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Re: Simple fix, ban Amazon from selling goods in UK

A small company could legally do exactly what Amazon are doing. The difference is that a small company would not come close to matching Amazon's commission rate as they would not have Amazon's economies of scale. Without the low rate, the small company would not attract any third party vendors.

Real simple solution: Buy cheap on Amazon and donate an extra 20% to HMRC. Any volunteers?

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Facepalm

Ahem *Whois* cough

So HMRC, nay but also GDS and central Gov use Amazon for their own services.

Less of an elephant in the room, more a Brontosaurus!

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I was banned from eBay once because of box shipping.

The only reason I was allowed back on is because at the time I had my small business as was VAT registered and was able to prove that my box shipments were legal and above board. The person who reported me however wasn't, they just didn't like that I was selling at a reduced rate compared to them. Apparently they did receive a stern letter from HMRC. Enforcement does occur, but usually the backward system goes after the legitimate sellers first.

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drop shipping?

"I was banned from eBay once because of box shipping."

Do you mean drop shipping, where you're taking orders then having the factory (or other supplier) ship them on your behalf?

Or re-boxing stuff, where you're selling goods that are legal, but the original packaging is protected by copyright or trademark?

Both of which I'm fairly sure are legal. Certainly if you put it in the fine print it should be in the UK.

I've had auctions cancelled when I used images belonging to the company whose goods I was selling. You can walk around it by taking a picture of the picture, but I stick to selling only second hand goods from that company now. Their lawyers did respond quickly and directly and they've done the same thing to web stores.

Since the majority of transactions are legitimate, almost any anti-fraud effort will impact more heavily on legitimate users than crooks. Most of the current "effective" scams rely in part on the anti-scam rules to try and scam the sellers. Amazon is awash in fake goods that get return binned back with legitimate ones, in part due the returns policy.

YMMV, but if I use recorded delivery AND mention that in the listings, most of the "dodgy purchaser" scams seem to pass me by now.

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"PAC chair Meg Hillier acknowledged the companies' efforts to tackle fraudsters, but added "you are still getting your commission off people who have defrauded the British tax payer."

Amazon hardly pay any tax so that would mean they are defrauding the British tax payer as well.

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"Amazon hardly pay any tax so that would mean they are defrauding the British tax payer as well."

I'm pretty sure all employees pay income tax, and then a massive VAT on top of that for their personal expenditures. Would you rather have them all unemployed, living off the state, when Amazon has left?

How much grit do you want to pour onto the economic machine -enough to make it stop turning completely?

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Any company would have to think long and hard before deciding to stop trading in a country.

I suspect if the HMRC got tougher with them they woudn't quit the UK market.

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"Any company would have to think long and hard before deciding to stop trading in a country."

There are many countries that Amazon isn't servicing.

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MAF
Coat

El Reg units

That's almost 15 DUP votes in tax revenue

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Re: El Reg units

"That's almost 15 DUP votes in tax revenue"

That's approaching harsh - but from so far away that you've got plenty of time to run with it...

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