Amazon and eBay are to ink a deal with the UK tax man this month to provide data on potential VAT evaders.
Both companieses 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 tax loss from VAT fraud and error on online marketplaces was £1.5bn in 2016/17. It estimates that overseas sellers contributed to approximately 60 per cent (up to £900m) of the VAT loss, with the rest attributed to UK-based sellers.
It follows a letter from HMRC chief exec Jon Thompson (PDF) to Public Accounts Committee head Meg Hillier last week outlining the data-sharing agreement.
“We have worked with a number of online marketplaces to produce an agreement,” he said. “Its purpose is to foster a collaborative relationship between HMRC and online marketplaces to promote tax compliance by users of online marketplaces.”
Web souks 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.
In addition, HMRC has increased the number of staff tackling online fraud and error to 171, and opened 2,100 investigations between September 2016 to 31 January 2018.
However, a spokesman for campaign group VATfraud.org said the agreement did not go far enough.
“They are still not seizing sellers’ stock, freezing funds or closing listings from warehouses (the only assets in reach of HMRC).
“Sellers are getting their stock back to them and then they send it back into Amazon under a new company name on their old highly ranked listings and avoiding paying any of their old companies’ undeclared VAT.”
Hillier had previously told The Register she would believe the likes of eBay and Amazon are serious about tackling this issue if they voluntarily introduced a system of automatically deducting VAT on behalf of sellers.
“It should not be beyond the wit of businesses this size to do this,” she said.
The agreement will be published later this month.
Of course, Reg readers may also note that Amazon has itself been criticised in the past by MPs over its super tax-efficient approach to commercial life.
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