Blighty's Trading Standards has reported more than 200 non-EU sellers to eBay for failing to display VAT numbers – a figure thought to "barely scratch the surface" of traders breaching the rules, El Reg can reveal.
Under e-commerce regulations, a VAT number must be easily, directly and permanently accessible. As an intermediary, an online marketplace does not have to enforce this regulation until notice of the problem has been given, said Trading Standards.
A spokesman from the watchdog told us the figure of 200 is likely to "barely scratch the surface" of the problem.
The issue raises the question of the extent to which sellers based outside Europe – but keep stocks of gear in the UK and ought to be VAT registered – are undercutting British businesses by not paying VAT.
eBay said: “We cannot comment on specific correspondence with regulators, however eBay is conducting an ongoing education programme with overseas sellers regarding their UK VAT obligations.”
Under UK tax law, sellers have to declare 20 per cent VAT. But El Reg discovered a number of sellers without listed VAT numbers which appear to be selling iPads at a rate that would amount to a loss-leader if they were declaring VAT.
According to independent research seen by El Reg, over the past decade foreign sellers have come to dominate UK online marketplaces, particularly in the consumer electrical goods market. For example, on one site in a particular sector, the biggest UK businesses made up 56 per cent of sales last year. Now they make up less than 18 per cent of sales.
One small business told us: "This year we made all our staff redundant as we can not longer compete."
The small trader, who asked not to be named, called on HMRC to crack down on sellers who ship supplies within the UK but avoid paying VAT. "Until HMRC takes action, businesses like mine are being put out of business," our source added.
An HMRC spokesman said: "We recognise concerns that businesses and individuals trading online may appear to be less transparent to the authorities and that those involved may be less compliant.
"However, we are cracking down hard on all forms of tax evasion, regardless of where it occurs or who commits it. We are determined to tackle deliberate non-compliance to ensure that the tax system operates fairly and efficiently to create a level playing field for all."
HMRC added that failure to display a VAT number was not a breach of tax law. ®