Online sales giants under fire over VAT - 19th October 2017

Amazon and eBay are loved by a wide range of people from business owners to mums and dads who want to raise cash by selling a child’s toy every so often.

But the online giants are currently in the Public Accounts Committee’ bad books for allegedly profiting from sellers who defraud UK taxpayers by failing to charge VAT.

A report by MPs estimates that up to £1.5 billion has been lost from third party sellers on online marketplaces not charging the tax on sales they make in the UK.

The fraud has increased because foreign firms selling goods to UK shoppers - usually via online marketplaces - are keeping some of their stock in UK warehouses to provide next day delivery.

If items are sent from the UK, sellers have to charge VAT at 20 per cent. However, many have not been, undercutting genuine UK suppliers and reducing tax revenue. The report added that Brexit will make the issue more complicated because of uncertainty over trading and customs.

The report’s main conclusions were that HMRC should set up an agreement with online marketplaces by March 2018 to tackle the issue and that websites should require non-EU sellers which dispatch goods already in the UK to provide a valid VAT number.

HMRC said it had introduced new rules last year to hold online marketplaces liable for unpaid VAT by overseas sellers, leading to a ten-fold rise in the number of sellers registering for VAT.

Amazon said it supported efforts to ensure sellers across all marketplaces were VAT compliant while an eBay spokesperson said it was going “above and beyond” HMRC’s requirements to provide a “fair marketplace”.

It is important to remember that if you work from home buying or selling things, for example on the internet or on auction websites, you need to know whether you should be registered for tax and/or VAT and what you may need to pay tax on.

The friendly team at SW&A can help point you in the right direction.

Call us on 01905 622202.

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