MPs have accused Amazon and eBay of profiteering out of companies based overseas that are fraudulently using their platforms to dodge VAT - and supposedly putting Brit SMEs out of business while they're at it.
In a Public Accounts Committee hearing, MPs heard that Amazon had collected the money from products sold by 23,000 non-EU companies from its British warehouses, many of which were suspected of avoiding the 20 per cent tax.
Steve Dishman, Amazon’s vice-president for taxes, and Joe Billante, eBay vice president, both said their companies were cracking down on sellers failing to declare their VAT numbers.
PAC chair Meg Hillier acknowledged the companies' efforts to tackle fraudsters, but added "you are still getting your commission off people who have defrauded the British tax payer."
Committee member Caroline Flint said: "We are talking about billions of pounds of VAT lost to HMRC and lost to the UK and alongside that, [it is] putting out of business legitimate [companies] that are playing by the rules."
According to figures from last year, the tax gap from unpaid VAT by due to overseas sellers failing to declare their tax is between £1bn-£1.5bn.
Billante said: “To be clear, I don’t want any of these sellers on our platform.” He said if someone is not compliant, they will take action.
Dishman said Amazon is actively going through their list of sellers to request VAT numbers. He said about 67 per cent of revenue from non-EU sellers is attributed to VAT numbers - but added that doesn’t necessarily imply 33 per cent are non-compliant.
He said the company had been sharing its data with HMRC. However, Jon Thompson, the head of HMRC, said Amazon was not providing “complete transparency” on the foreign retailers that were using its site.
The Register has previously reported on 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.
One small business owner, who asked not to be named, said the practice had undercut his business for consecutive years to the point where he no longer employs staff.
Two years ago, a Register analysis revealed iPad sellers based outside the UK are selling cut-price fondleslabs in Blighty after seemingly bypassing UK VAT payments. ®