As the FT reported last night:
Online marketplaces such as Amazon and eBay face being forced to collect value added tax on UK sales made on their platforms by overseas retailers in an effort to combat fraud worth an estimated £1.5bn a year.
In a leaked document seen by the Financial Times, HM Revenue & Customs revealed its plans to end the status of online marketplaces as mere facilitators of UK sales of overseas goods and instead treat them as the vendors that are responsible for handing over VAT to the government from January.
The move suggests that the tax authority has accepted that its previous attempts to stamp out VAT fraud by overseas retailers on online marketplaces have failed.
About time, is all I can say. I wrote about this issue and the legal basis for addressing it in 2015. Why has it taken so long to address? I know that HMRC knew all that was happening by that date: I played a small part in ensuring that they did. The indefatigable campaigner, Richard Allen, played a vastly bigger part.
There has been no excuse for their inaction, the cost of which has been immense. The likely low-end estimate of the cost has been £1.5 billion a year.
The fear of upsetting tech companies that our government has shown for far too long has cost us dear.
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And the government is apparently using Amazon to deliver Covid19 test kits. I don’t see any joined up thinking in government policy. Even before the privatisation of the Royal Mail government departments were using alternative mailing companies for Mail despite the fact that RM were responsible for the delivery component. Since they were providing these companies with so much revenue they could at least collect some taxes from them.
FWIW my view is that within HMRC (and other gov’t bodies) there has been massive deskilling. In its day Inland Revenue staff were highly trained and had a history of being public servants who took the line that their role was to facilitate collection of all income tax that was due. It was a highly principled position. The merger with Customs and Excise was supposed to bring a much more assertive approach based on the long history of catching smugglers. Customs staff were likewise well trained; just a bit more ‘aggressive’.
I know it is easy to say ‘in the old days’ – but most ex HMRC staff now in retirement have a more thorough understanding of both tax and case law than many currently in post.
That allows under qualified and relatively inexperienced staff to rise up the HMRC food chain.
The other part is of course government where the best we can say is ‘the lights are on but no one is home’.
Footnote: Amazon under AWS (amazon web services) has a virtual monopoly on all gov’t digital stuff.
You are right…
There are very few fully-trained inspectors now
Spot on. Yet to meet anyone who really understands online retail in HMRC or HMT
Richard
Hi, I havent been able to access the article – but i am guessing you are aware this is not of the UK making?
Although it has been postponed to 1st July 2021, the EU had already decided that from 1st Jan 2021, liability for Tax collectors would be with major online vendors. https://ec.europa.eu/taxation_customs/business/vat/modernising-vat-cross-border-ecommerce_en
Giving HMRC credit for this is too much!
The legislation is also very quiet on what happens to vendors such as alibaba, that are in fact outside EU jurisdiction in terms of penalties?
My own experience on this is that making the e-commerce portal liable for collecting VAT should have happened a long long time ago. After all, on my company e-commerce site, we collect and remit VAT.
I applaud the idea of both collecting VAT at the point of sales on Amazon/Ebay/Etsy etc. And I think making it easier for companies to have a single VAT registration for all EU countries can only be a bonus.
Anyway, my unsubstantiated view is that it’s easier for HMRC to go after the little fish than the big fish (Amazon), who would just nod and do the opposite anyway. Who would dare to take Amazon to court? And when it comes to non EU small business, those sellers can just dissappear and open up new accounts for selling.
You know we are supposedly on our own from 1.1.21?
lol..yes i heard a rumour about that..at a safe distance..
I was more getting at the fact that, this isn’t HMRC coming up with a radical idea. It was already in the pipeline from a few years back, when some online sellers campaigned to their MEPs and set the ball in motion for reducing vat compliance costs across the EU and making platforms liable. Granted, UK didn’t have to implement this – so i suppose some credit to HMRC there.