News

UK has ‘red flagged’ 4,600 sellers for tax evasion on marketplaces like Amazon in 2 years

UK has ‘red flagged’ 4,600 sellers for tax evasion on marketplaces like Amazon in 2 years
Technology
The U.K.’s tax authority has “red-flagged” 4,600 online merchants, from a total of 7,000 investigations, in the last two years that have been evading sales taxes on goods sold in the U.K. on major marketplace sites like Amazon and eBay. Many of those online stores have been shut down and deleted as a result, while those now selling to U.K. buyers legitimately are giving the U.K.’s tax coffers a £205 million ($255 million) boost.

The numbers are the latest milestones in a  long-term, ongoing operation by HM Revenue and Customs (HMRC). The authority has been working in conjunction with seven online marketplaces — Amazon, eBay, Fruugo.com, Wolf & Badger, Etsy, ASOS and Flubit — which last year signed on to cooperate in the investigation to identify merchants evading taxes by providing records of sales and other data obtained by the HMRC itself (we asked and it did not elaborate on what the latter entails).

The HMRC has estimated that ($1.3-1.9 billion) in collections were lost in a single year (2017) by companies failing to pay sales taxes on goods, with between £600 million and £900 million of that coming from overseas sellers.

The HMRC defines overseas sellers as a merchant that sells goods “in the UK to UK consumers and don’t have a business establishment in the UK.” Merchants based outside the EU that sell goods to U.K. consumers and then import them to the U.K. are also overseas sellers.

The Joint and Several Liability (JSL) notices — as the red flag notices are officially called — have been around since 2016, part of a wider remit both to identify tax loss and also weed out those who might be tricking the system to the detriment of U.K. businesses.

“Delivering a fair and level playing field for businesses is a top priority for this government,” said Financial Secretary to the Treasury, Mel Stride MP, in a statement. “These figures show that HMRC, working closely with the major online marketplaces, is making real headway tackling this serious and damaging evasion.”

But the agreements signed earlier this year with marketplaces like Amazon to help identify violating online sellers has given the program a boost: now, if a seller’s account does not get removed after it has been red-flagged, the marketplaces themselves become liable for any future sales taxes that the sellers incur. (It does not appear that they are liable for past taxes, though.)

The HMRC said that another consequence of the operation has been a boost in VAT (value-added tax, or sales tax) registrations by overseas companies. Between 2017 and the end of 2018, there were 58,000 VAT registration applications, compared to only 1,650 between 2015 and 2016.
Read more on TechCrunch
News Topics :
Similar Articles :
Business
Thousands of overseas sellers have been evicted from online marketplaces in the UK such as Amazon and eBay owing to a tax crackdown. Businesses, mostly from China, sold items including...
Technology
The report estimates up to £1.5bn has been lost from third party sellers on online marketplaces not charging the tax on sales they make in the UK. MPs in the Public...
Business
A BBC Panorama team has smuggled goods into Britain and then sold them on eBay and Amazon to highlight a fraud costing the country a billion pounds a year. The...
Business
The government is to take steps to stop VAT avoidance by multinationals that shelter their income abroad and also by sellers on online websites. From April 2019, companies such as...
Technology
Amazon Inc will launch its business loan program for small sellers later this year in eight more countries including China, where credit is becoming a key factor in competing for...