Despite changes to UK law that have made Online Marketplaces (OMPs) collect VAT from overseas sellers since January 2021 abuses have continued. Initially the new measures were very effective as the OMPs began collecting VAT from sellers who were not established in the UK. However, it soon became clear that HMRC and Companies House had permitted businesses located outside the UK to obtain UK VAT numbers and UK Company Registrations, which they then used to pretend they had UK establishment. This led to a crackdown by Amazon who decided to request verification of the identity and location of sellers using their marketplace, a complex process that not only uncovered overseas businesses pretending to be in the UK but resulted in some genuine UK sellers having their accounts temporarily blocked.
Determining whether or not a business is really established in the UK is not as straightforward as one would think, particularly where individuals are able to use a combination of fake documents, friends, relatives or paid stooges to appear to have UK directors, premises and staff. On eBay the problem is made worse due to eBay's categorisation of accounts as either private or business. Private accounts can only sell goods up to a value of £1000 before they are supposedly reported to HMRC but it appears that accounts selling below £1000 on eBay are not being monitored for abuse. RAVAS has seen examples of multiple private accounts that are being used by Chinese sellers to sell goods in the UK free of VAT and it is likely that a business may have tens, if not hundreds of private accounts which are used to sell new goods that have been imported from China (often without the payment of import VAT and duty). UK eBay private accounts, both fake and genuine, are openly being traded online and overseas sellers are obtaining multiple UK private accounts which they use to stay below the radar.
Then again why bother hiding the fact that you are not accounting for VAT? RAVAS has an example of a Chinese seller on eBay listed as a UK company that is not charging VAT or providing a VAT invoice, indeed when asked for one the seller offered not only a 20% refund but an additional 10% for the inconvenience! The reality is that until Online Marketplaces are made to collect VAT on every transaction and ID verification is more robust, this game of 'find the lady' isn't going to end anytime soon!
Comments