Amazon and eBay have been accused of "collaborating with hundreds of overseas retailers to defraud the taxman of millions of pounds every day," during a House of Lords debate on the question of VAT evasion by overseas online retailers.
Lord Lucas, who brought the debate, said: "It seems that HMRC has been very slow in its response. Does HMRC realise the importance of effective and speedy enforcement for the fairness of the tax system and for the protection of honest internet retailers, and why has it been so reluctant to work openly and actively with UK businesses that know this part of the internet backwards and are in a position to help it make its enforcement effective and speedy?"
Lord Ashton of Hyde said: "A meeting with the top online retailers at a very senior level took place only last month. HMRC has dedicated 25 per cent of its customs and international trade operational resource to this problem and has set up a national task force to deal with it."
HMRC is now facing increased pressure to tackle the seemingly growing number of sellers based outside Europe who hold stock in the UK, but sell goods online without having a registered VAT number.
The practice is also thought to be undercutting a number of small sellers who are unable to compete against fraudsters - an issue The Register has reported on extensively.
In November a European tax expert said HMRC could be reluctant to crack down on VAT fraudsters selling goods online without declaring VAT because of the costs involved.
Rita de la Feria, a professor in tax law at Durham University, claimed that Amazon and eBay may be liable for VAT if they do not take due diligence and ask questions of their suppliers; for example, prices that are too low or inability to provide VAT numbers should raise flags.
A spokesman from eBay said: “eBay reminds all its users of their need to comply with their legal obligations and we also provide helpful guidance on VAT through our Policies and Help pages with the aim of providing a safe and fair marketplace for all our buyers and sellers. If eBay sellers are found to be breaching UK VAT compliance rules, we will cooperate with HMRC in all cases where HMRC provides evidence of underpayment of taxes.”
He continued: "We have met with HMRC to discuss how best we can work together with them and other Marketplaces to address this issue. We are committed to working with HMRC to ensure our sellers are complying with their legal obligations.”
An Amazon spokesman said: “Marketplace sellers are independent businesses responsible for complying with their own VAT obligations. We do offer tools and information to assist sellers with their compliance, but we don’t have the authority to review their tax affairs.” ®