Amazon And eBay Face HMRC VAT Crackdown

Retailers warned they could be investigated over lack of tax paid by overseas resellers

Online retail giants such as Amazon and eBay are the focus of a new investigation by Her Majesty’s Revenue and Customs (HMRC) following claims that the sites are colluding with resellers in order to avoid paying tax.

The government claims that many of the most popular items on major British online shopping sites are sold by overseas vendors who do not pay VAT charges, leading HMRC to consider whether it can force sites like Amazon and eBay to bear the cost of this.

Both companies have denied being involved in any tax evasion scheme.


HMRC LandscapeThe crackdown is being led by Conservative Peer Lord Lucas, who said: “Amazon and eBay have been collaborating with hundreds of overseas retailers to defraud the tax-man of millions of pounds every day.”

Lucas is now demanding HMRC investigate in order to ensure “effective and speedy enforcement for the fairness of the tax system” and that “honest internet retailers” are protected.

In particular, Lucas wants to check on the growing number of small overseas merchants who have imported goods into Britain in advance of the Christmas rush, before doing deals with Amazon to dispatch the stock from its UK warehouses.

The Guardian reports that many of these VAT-free sellers give virtual office or residential addresses in China, Hong Kong and the US, and often deal in high-value items such as iPads and smartwatches.

An HMRC taskforce has now been set up to investigate this issue, a Treasury spokesman told the House of Lords yesterday, following meetings with senior figures at Amazon and eBay that took place last month. It will now look into the dealings to see what action can be taken.

This is of course not the first time that Amazon’s tax practices in the UK have come under scrutiny. Along with other American heavyweights such as Starbucks, the company was vilified in the country back in 2013 after it was revealed Amazon paid no corporation tax at all on its profits in 2011.

This led to widespread protests demanding that the company pay more tax in the UK, a debate which still rumbles on to this day.

Last month a group of British businesses who sell via Amazon and eBay launched a petition urging the government to take action to stop online VAT fraud by tightening the tax regulations that apply to such websites.

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