- 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
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.
Amazon has been accused last night of profiteering from a multi-billion-pound VAT fraud that is pushing British businesses to the wall
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.’
Labour’s Caroline Flint was among the MPs criticised Amazon for letting foreign traders store goods in its warehouses even if they do not have a valid VAT number
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 operate 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.