back to article Amazon and eBay agree to expose potential VAT evaders for UK tax man

Amazon and eBay are to ink a deal with the UK tax man this month to provide data on potential VAT evaders. Both companies confirmed to The Register they will sign a voluntary agreement with HMRC, along with other online marketplaces, to combat sellers failing to pay their fair share of tax in Blighty. According to HMRC, the …

What's that old saying?

"Set a thief to catch a thief"

or something like that.

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Re: What's that old saying?

@dervheid

I think you'll find it's "Set a deep hole with spring-loaded sides, tripwires, whirling knife blades driven by water power, broken glass and scorpions, to catch a thief."

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Re: What's that old saying?

"Set a deep hole with spring-loaded sides, tripwires, whirling knife blades driven by water power, broken glass and scorpions, to catch a thief."

Who gave you a copy of my Pathfinder campaign?

(I like traps. I like traps a lot. Especially ones that require the players to think..)

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Re: What's that old saying?

The only theft that is going on herer is that committed by HMRC on behalf of the UK government.

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Re: What's that old saying?

I think you will fine a rather good Pterry P

"The phrase 'Set a thief to catch a thief' had by this time (after strong representations from the Thieves Guild) replaced a much older and quintessentially Ankh-Morporkian proverb, which was 'Set a deep hole with spring-loaded sides, tripwires, whirling knife blades driven by water power, broken glass and scorpions, to catch a thief.' "

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Anonymous Coward

Re: What's that old saying?

"will commit to providing a minimum amount of data on their sellers, including identifying individual businesses, their contact details, and calculating their sales in the UK."

The taxman has had legal access to that information for years. Not clear what is new here.

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Anonymous Coward

Re: What's that old saying?

The most intelligent comment made on this thread... and for the rest... there seem to be a bunch of English patriotic morons with very low intellect, trying to appear clever... ANY type of TAX is extortion... PERIOD. Get that into your heads folks... someone called Doug Casey, stated a while ago:

“What is a slave? He's someone who is deprived by force of the fruits of his labor. Sound familiar? I disapprove of slavery, in any form – including its current form.”

About being "immoral"... IT IS immoral to pay taxes... funny how many people are happy of being robbed "legally" in the (wrongly) name of "contribution"... and get mad at people that want to "avoid" being robbed (sorry, I mean paying extortion fees)...

By the way.. do not give me the pathetic "I pay my taxes, you should too" or anything to do with silly ENGLISH patriotism... F*ck that... Rant over

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It is not just lost VAT ...

but since they can charge 20% less than a native vendor (ie UK based who does pay VAT) they can undercut them and so UK jobs, etc, are lost. Thus the true loss to the UK is much more than the £1.5 billion VAT.

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Re: It is not just lost VAT ...

maybe they should just abolish VAT, which is just an additional tax. At least then those of us on PAYE will pay the same as contractors and others that can claim their VAT back.

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Anonymous Coward

claim their VAT back

They can only recover VAT for legitimate business expenses and will be in for major fines if they can't justify the claims.

I also don't see why they shouldn't be able to recover VAT. When I was contracting, I had to stay in hotels and provide equipment - why shouldn't this be treated the same as for any other business?

PAYE and VAT are not related.

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Re: It is not just lost VAT ...

Its not even just VAT- I know a few people who make a decent side income from eBay and declare none of it. Years ago I had a thing going where a friend working in the local recycling plant would fill his car with any half decent looking computers that were taken to the tip, he'd drop them at mine and I'd clean them, wipe the disks* and stick them on eBay.

We didn't get anything AMAZING but it was a constant stream of mostly working PCs all a few years old.

By the time we got properly into a routine we were getting a couple K a month split between us (and the manager at the recycling centre who needed his palms greased) - unfortunately that stopped when my friend on the inside finished uni and got a better job and the council realised there was money to be made and started selling the electrical off to their own buyers.

Being a good citizen I of course declared my additional income - but I can guarantee that the majority in a similar situation wont be paying TAX on their income.

* I've been privy to more home made porn than I care to remember

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Re: It is not just lost VAT ...

"maybe they should just abolish VAT, which is just an additional tax. At least then those of us on PAYE will pay the same as contractors and others that can claim their VAT back."

I wondered how fucking long this would take to come up.

Contractors can only claim VAT back on business expenses, that is expenses incurred by their business - your employer does the same.

As a contractor I am an EMPLOYEE of my company I personally pay the same VAT on everything that you do. If my EMPLOYER buys something then they get to claim the VAT back as long as the thing that they bought is for business use. The fact that I own the company that employs me has no bearing whatsoever on this.

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Re: It is not just lost VAT ...

Depends what kind of company surely? I knew a guy who ran an office cleaning business and (just one example) bought toilet rolls by the containerload. When you visited his house and went to the loo do you think you saw Tesco toilet roll there? There must be loads of unprovable ways to avoid tax when you have a business.

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Re: It is not just lost VAT ...

Well, that would be an employee benefit. Lots of companies have them (free gym membership, health car etc.) No VAT fraud there but you are meant to declare the value of the benefit as it is taxed (PAYE) as income. How much toilet paper can you get through? Seems there are more important tax frauds going on.

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Anonymous Coward

Re: It is not just lost VAT ...

"maybe they should just abolish VAT"

We'd need to be (fully) out of the EU before we're allowed to conisder that ... after all, they (EU) have said they won't complete their decision on whether we can remove VAT just from tampons for another 2 or 3 years

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Re: It is not just lost VAT ...

I think that HMRC don't start asking questions until you're earning something undeclared over £4k a year, minimum.

Even then, you can "get away" with things for a lot time, but you would be an idiot to try to do so via Amazon or eBay, etc. In a cash-business, yes, you can get away with a lot. Ask London cabbies about the back-handers from strip-clubs, as exposed on the news not long ago. Up to £80 cash-in-hand for a dropoff in some cases, the second the customer enters their premises.

But with something like Amazon or eBay, where you need a bank account? They'll get you eventually but they'll wait until you've run up a bill worth chasing you for.

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Re: It is not just lost VAT ...

"Ask London cabbies about the back-handers from strip-clubs, as exposed on the news Dave Gormans Modern Life Is Good-ish not long ago."

FTFY

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Re: It is not just lost VAT ...

Amazon doesn't need a bank account... just a debit card/credit card. eBay still uses Paypal a lot but apparently they are moving away from them to their own card solution.

But I'm glad to see that they are starting to do *something* about this... now if they could only start doing something about the fake goods sold on both market places (apparently Facebook is the 'new' thing with their Marketplace, and it's overrun by cheap fakes too).

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Facepalm

Re: It is not just lost VAT ...

"Amazon doesn't need a bank account... just a debit card/credit card. "

Ummm, you did know that those debit/credit cards are typically associated with bank accounts, don't you?

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Re: It is not just lost VAT ...

>maybe they should just abolish VAT, which is just an additional tax.

This represents about a third of all tax collected by HMRC, given it would be the Conservatives who would implement this, I can see the entire Education and Health budgets being cut...

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Anonymous Coward

Re: It is not just lost VAT ...

Erm...permie alert!

Yeah ditch VAT, its a waste of time and money...but VAT registered contractors though?

You know the threshold is £85k right?

Most contractors won't be VAT registered...

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Anonymous Coward

Re: It is not just lost VAT ...

Indeed.

Im sure HMRC could care less about Bogroll Barons.

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Anonymous Coward

Re: It is not just lost VAT ...

Depends on the source of income. You aren't required to report anything below £11,300 (soon to be £11,800) if the income is classed as a capital gain.

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Anonymous Coward

Re: It is not just lost VAT ...

No...VAT has nothing to do with education and health budgets.

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Anonymous Coward

Re: claim their VAT back

Businesses do not claim back VAT. They offset it against the VAT they have collected on behalf of HMRC. VAT is paid by the purchaser, collected by the business on behalf of HMRC.

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You don't have to pay VAT for business expenses?

Definitely different than state sales taxes in the US then. A business is only exempt from sales tax for something that is resold as is (i.e. if you buy computers wholesale and sell them, you don't pay sales tax for the purchase, but collect it from the sale) or something that is processed into something that you sell (like a restaurant buying beef that is ground to make burgers)

If I buy a new printer for my home office to use in my business, there's no exemption. I have to pay sales tax on it. Doesn't matter whether it is a one person company doing $5000 in sales a year or Apple doing a couple hundred billion in sales, both have to pay sales tax when they buy that printer.

Doesn't make sense to me that businesses are exempt from paying VAT. If a restaurant buys a printer, they obviously aren't selling printers or using it when they make a burger, so why not collect VAT on it? If they collected VAT on all that stuff they could probably lower the overall VAT rate significantly while collecting the same revenue, and make it harder for cheaters to dodge VAT by saying something will be used by their business when it isn't.

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Re: You don't have to pay VAT for business expenses?

>If I buy a new printer for my home office to use in my business, there's no exemption. I have to pay sales tax on it.

Same with VAT, the sum of money that gets handed over is the same. However, the fun and games start with how that purchase is accounted for.

For non-VAT registered businesses and those in the flat rate scheme, the only thing that can be done with that receipt is to treat it like a normal expense and thus offset the entire receipt against their normal tax. However, a business that does full itemised VAT has a choice, they can take the VAT/sales tax element (itemised on the receipt) and deduct it from any VAT they have collected from their sales - paying the reduced amount of VAT to HMRC, alternatively they can simply expense the VAT element along with the other costs on the receipts against their normal taxes.

It is a little surprising that the UK VAT rate has remained at 20% and not been returned to 17.5% or even 15%, because as you say higher tax rates make it more remunerative to find ways to avoid paying the tax. But as I noted previously, VAT accounts for about a third of the tax revenues HMRC receives and any significant reduction in the amount collected could hit government expenditure hard.

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Anonymous Coward

Re: It is not just lost VAT ...

He surely had a very proactive approach and on going role in quality control and product testing at his company.

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Re: It is not just lost VAT ...

Typically. But not necessarily within the reach of the HMRC.

Besides, when one says "does it need a bank account", it usually means "they need actual sort code and account number". Requiring a credit or debit card (and not bank details) does *not* mean it's not traceable, but it adds a level of indirection, which adds more work, more resources.

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Re: It is not just lost VAT ...

@anon

Thats only a day rate of 380 assuming you have a month out of work.

Also you can sign up to be vat registered before earning that much.

Most contractors are VAT registered.

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Re: I've been privy to more home made porn than I care to remember

Got any left?

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Re: You don't have to pay VAT for business expenses?

"Doesn't make sense to me that businesses are exempt from paying VAT."

That's because it's not technically a sales tax, it's more akin to a luxury tax and is currently 20%

VAT doesn't apply to the "essentials" of life such as most food (weird exceptions), childrens clothes (handy if you are small, women in particular), books (but not ebooks). What's an average sales tax in the US? Would Apple be buying in printers to re-sell if there was a 20% tax on their wholesale purchase followed by a further 20% tax for the end consumer? No way is Apple paying Sales tax, they would just mark it up on the retail price and anyway, business only pay tax on profits, so any tax added to their business purchases are offset against the profits and hence their tax.

As our infamous ex-reg journo was fond of pointing out time and again, only the end consumer pays taxes. Everything else is just expensive and non-productive paper shuffling to hide the real situation.

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Re: You don't have to pay VAT for business expenses?

"But as I noted previously, VAT accounts for about a third of the tax revenues HMRC receives and any significant reduction in the amount collected could hit government expenditure hard."

Most taxes, but VAT in particular, is just a way of keeping the headline PAYE tax rate as low as possible for voting purposes. A tax free allowance of £12000 and then 40% income tax on everything over and abolish VAT would probably mean the vast majority of people would be no worse off, but no politician is going to do that. There are probably real figures somewhere showing how this would work that are more accurate than the one I just pulled from by arse :-)

Other benefits of abolishing VAT is the reduction on workload for importing goods, any business that currently has to deal with VAT and the number of people in HMRC who deal with VAT. That's probably a saving of billions in itself to the economy as a whole.

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Re: It is not just lost VAT ...

@Natalie - agreed, toilet paper is definitely at the bottom of the list of useful 'dodges' but one of the earlier contributors, moaning about how soon it would come up, is probably able to buy the latest tech under his "company boss" hat for use under his "home with the family" hat, and then says "The fact that I own the company that employs me has no bearing whatsoever on this." which I consider a steaming heap of BS.

He's clearly annoyed at the suggestion, and by sinking into the sewer to use the f-word, it gives (to me, perhaps alone), all the more reason to think it's the result of it being true, and the louder he shouts it isn't, the greater the suspicion it is.

If some of the equipment happens to have useful access to, say, Netflix, iPlayer, Sky Go, he'd no doubt claim it was purely to keep up with legislation :)

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Anonymous Coward

Re: claim their VAT back

"offset it against the VAT they have collected on behalf of HMRC"

unless they produce "zero rated VAT" products, of course, but have to buy goods and therefore DO claim back the VAT they have paid.

(eg Children's clothing is zero rated, but there wa VAT paid...)

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Re: claim their VAT back

>unless they produce "zero rated VAT" products, of course, but have to buy goods and therefore DO claim back the VAT they have paid.

Not sure of your point AC, but such businesses still offset it against the VAT they have collected, just that for these businesses the net VAT collected is likely to be negative and hence HMRC sends them a cheque.

HMRC sending out cheques to those with negative VAT accounts helps to make it remunerative for businesses to claim back VAT on expenses. As HMRC don't send out cheques if your level of expenses exceeds your post-VAT income...

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Re: You don't have to pay VAT for business expenses?

>Most taxes, but VAT in particular, is just a way of keeping the headline PAYE tax rate as low as possible for voting purposes.

Whilst this might be a factor, you shouldn't overlook the grey economy. Taxes like VAT are very good at collecting some tax from the grey and cash economies.

The challenge is setting the levels (both PAYE and VAT) such that for the majority there is little benefit from actively trying to avoid paying these taxes. With the top rate, originally set at 50% and then reduced to 45% we saw this in action: the government collects more tax from the 45% band than they previously collected from the same demographic with the 50% rate.

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Re: You don't have to pay VAT for business expenses?

John, You said "Probably" too many times for me to take your argument seriously.

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Re: It is not just lost VAT ...

Oh Dear, Lets take it one at a time shall we?

"@Natalie - agreed, toilet paper is definitely at the bottom of the list of useful 'dodges' but one of the earlier contributors, moaning about how soon it would come up, is probably able to buy the latest tech under his "company boss" hat for use under his "home with the family" hat, and then says "The fact that I own the company that employs me has no bearing whatsoever on this." which I consider a steaming heap of BS."

The point I was making is that anything I buy while wearing my "Company Boss Hat" has to be justifiable as a business expense. So I can buy a shiny new laptop for 3k as long as its primary function is for work (same as you taking an employers laptop home and being allowed to use it to browse the net in your own time).

I *could* if I wanted go out and buy myself a 55" curved AMOLED TV for "Video conferencing" but If I get investigated I'd fully expect to end up with a ridiculous fine if they found it in the front room with an x box plugged in.

"He's clearly annoyed at the suggestion,"

Clarification : Im annoyed at the constant suggestion that contractors are somehow diddling HMRC and that everything we do should be taxed at the same or higher rate as permanent staff. This comes from a distinct lack of understanding of how limited companies operate and the fact that for liability reasons we NEED to work under a limited company - Try to get a contract role as a sole trader.. I can guarantee that you wont at least not for any decent rate or for a decent length of time.

"and by sinking into the sewer to use the f-word"

C'mon, we're all adults, its just a word, say it.. you'll feel much better.

"If some of the equipment happens to have useful access to, say, Netflix, iPlayer, Sky Go, he'd no doubt claim it was purely to keep up with legislation :)"

Actually there is a bit of a grey area there, all of my previous employers before I started contracting allowed me to use my IT equipment for personal use (within reason) - I dont see why having netflix on my work laptop would be an issue now that I am running my own company?

Its not to keep up with legislation, its so I can watch movies when Im in a hotel 4 nights a week for months on end. In fact - if you go and have a look at HMRCs web site you would find that it would actually be permissible for the company to pay for the subscription as long as it was declared as a BIK and I (personally) paid the tax on it.

But then that would require you to have some knowledge of the subject rather than just spouting some crap you made up based on something someone once told you.

--

Kisses.

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Re: It is not just lost VAT ...

"least then those of us on PAYE will pay the same as contractors and others that can claim their VAT back."

Sorry, Just one last point.

WTF has PAYE got to do with VAT?

Im paid via PAYE too - at least partially. It has no impact on the VAT that I pay when I go shopping.

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Thumb Up

Got to love Amazon doing their bit for HMRC tax collection - absolute gents!

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The sarcasm is strong in this one.

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Anonymous Coward

Very true, they will happily shop people that make them money without regulation.

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Perhaps they should just, I don't know, go after Amazon?

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And the bit not written down..

Amazon and eBay are to ink a deal with the UK tax man

Scratch my back and I'll scratch yours. Tax avoidance? What tax avoidance?

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Re: And the bit not written down..

"Scratch my back and I'll scratch yours. Tax avoidance? What tax avoidance?"

Maybe, maybe not. It could just be HMRC using the current situation of most EU countries and the EU itself going after Amazon, EBay and the like as an extra stick to beat them with. Play nice and show you can be responsible and ethical, or it might get a lot, lot worse.

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Anonymous Coward

It is fairly obvious from listings on at least eBay that some Far East sellers have multiple user names selling the same products. Presumably designed to keep a lower profile.

Not sure how the UK warehousing works. It may be one warehouse per seller - or an independent warehouse acting as a factor for several Far East sellers.

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The Far East sellers don't have local warehouses. They ship direct via Hong Kong Post. If they *do* have local warehouses, it's hand-written and inevitably appears to be someone's garage or something.

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"The Far East sellers don't have local warehouses. They ship direct via Hong Kong Post. If they *do* have local warehouses, it's hand-written and inevitably appears to be someone's garage or something."

Students quite often have part time jobs to offset their costs. There are a LOT of Chinese students in the UK.

I'd certainly not be surprised to learn that some of these students get a lot of "gifts" from "family and friends" and may even need a lock-up to store it in.

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