UK: Amazon 'turns a blind eye' to £1.5bn VAT fraud
Amazon 'turns a blind eye' to £1.5bn VAT fraud which sees
foreign sellers undercut law-abiding British traders
Amazon has been accused of profiteering from a
multi-billion-pound VAT fraud
MPs said the retailer was ‘turning a blind eye’ to
organised criminals from China
This takes up to £1.5billion a year from Treasury coffers
and undercuts traders
Amazon blasted as foreign traders use warehouses without
valid VAT numbers
By DANIEL MARTIN FOR THE DAILY MAIL PUBLISHED: 19:02 EDT,
13 September 2017 | UPDATED: 21:22 EDT, 13 September 2017
Amazon was accused last night of profiteering from a
multi-billion-pound VAT fraud that is pushing British businesses to the wall.
MPs said the online retailer was ‘turning a blind eye’ to
organised criminals from China and elsewhere who sell their goods cheaply on
internet auction sites – but don’t register to pay VAT.
The scam takes up to £1.5billion a year from Treasury
coffers and lets the sellers undercut law-abiding British traders, forcing them
to fold or lay staff off.
Yesterday, MPs on the Commons public accounts committee
accused internet marketplaces Amazon and eBay of not doing enough to root out
foreign firms that fail to pay tax.
They also said that because online retailers take a
commission from the total that tax-evading traders make, they receive more
money from them than if the 20 per cent VAT was paid – letting them ‘profiteer’
from the fraud.
The MPs criticised Amazon for letting foreign traders
store goods in its warehouses even if they do not have a valid VAT number.
Labour MP Caroline Flint said: ‘The by-product of both
Amazon and eBay and other online marketplaces is that you are profiting from
the evading of tax by these overseas sellers.
‘We are talking about billions of pounds of VAT being
lost to HMRC and therefore being lost to the UK, and the putting out of
business legitimate firms that are playing by the rules.’
Registering for VAT and paying it is the responsibility
of the seller – not Amazon, which insists it is just providing a marketplace.
Foreign firms selling on internet auction sites should
register with HMRC and obtain a VAT number. Typically, the VAT would be added
to the cost of the product, making it more expensive to shoppers.
But many don’t bother, meaning they can undercut UK
sellers, while the websites don’t intervene to stop from trading.
Steve Dishman, vice president for taxes at Amazon – which
has also been criticised for not paying enough corporation tax, and Joe Billante,
chief financial officer for the European arm of eBay, appeared before the
public accounts committee yesterday.
Miss Flint said the firms were ‘profiteers from evasion
of tax’.
But Mr Billante said: ‘I do not want these sellers on our
platform. If anyone is not compliant and we are notified, we take action.’
Mr Dishman added: ‘We recognise there are a proportion of
bad actors. We would like all bad actors off our platform.’
Richard Allen, of Retailers Against VAT Abuse Schemes,
said: ‘Twenty per cent is a large sum. If competitors are avoiding the 20 per
cent you can’t compete.’
TRADERS WHO EVADE PAYING TAX OF 20%
Companies whose turnover is more than £85,000 a year must
register with the HMRC to pay VAT of 20 per cent.
This cost is meant to be added to the price the customer
pays.
Amazon operates as an online marketplace hosting many of
these sales on its website.
But it is not liable for their VAT because it is simply
facilitating the transaction – not selling the wares itself. This means that
Amazon leaves it to the overseas trader to register for VAT and to pay what is
due.
However, because many foreign sellers don’t, MPs said
yesterday that Amazon should do far more to root out firms that defraud the
taxpayer in this way.
Amazon insists it has removed hundreds of these so-called
‘bad actors’ – but the Public Accounts Committee said yesterday that it is not
doing enough.
The online retailer charges the trader a commission for
being allowed to sell their wares on its site.
MPs said yesterday that, because the online firm was not
paying VAT, Amazon is getting more than it would otherwise have done.
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