You may recently have seen this article on the BBC website, which reports that marketplaces like Amazon and eBay “could be liable for billions of pounds in unpaid VAT if they fail to properly investigate traders using their sites to escape sales tax.”
One argument within the article suggests that under EU law, the onus is on marketplaces to spot when their users are committing tax evasion. However, there is a counterargument from Amazon and eBay that the responsibility to prosecute tax evaders sits with HMRC. The article offers up this quote from an Amazon spokesman: “We do offer tools and information to assist sellers with their compliance, but we don’t have the authority to review their tax affairs. Naturally we cooperate with HMRC as we are required to by law.”
A couple of online sellers within the piece say that they can’t compete with the tax evaders, and Mark Bond, e-Commerce expert at World First agrees that it is a problem they many people are worried about.
“This is interesting and a growing concern for our clients,” Bond says, “but there are actually significant advantages for them when they pay their tax. For example, many UK sellers will just pay HMRC tax at 20%. However they should have been paying German tax at 19% rather than paying HMRC. As such we can help them to retrieve that extra 1% as profit.”
Chris O’Shea from Meridian Global Services says “the UK government are extending powers to HMRC which will allow them to electronically receive data from marketplaces and identify non-compliant traders in the B2C sector. This is a game changer for sellers and marketplaces and will almost certainly lead to more VAT revenues being collected.”
For more information email Meridian Global Services at firstname.lastname@example.org or call + 44 (0) 20 8601 4600.