Reduce online fraud in VAT
Last updated: 02:01pm 13 January 2019
Conservative Party Manifesto 2017, p.17
We will also take further measures to reduce online fraud in Value Added Tax.
This policy is about businesses (overseas or UK-based) selling to the UK via online marketplaces like Amazon and eBay – and not paying value added tax on their sales. Online VAT fraud has been estimated to cost the UK anything from £1 – 1.5 billion in lost tax revenue per year. And unsurprisingly, law-abiding retailers aren’t happy about this either.
What’s happened so far? Well, the biggest change happened on March 15th 2018 when the Finance Act 2018 became law. The Finance Act includes measures to tackle online VAT fraud by targeting online marketplaces (like eBay and Amazon) and making them responsible for paying any VAT that their sellers should have paid. So the burden is now on the marketplaces, not the individual sellers.
The good news is that these measures are already showing signs of success after HMRC ramped up activity in 2018. According to the BBC, the number of new VAT registrations rose to 58,000 in 2018 compared with 1,650 applications between 2015 and 2016. That’s a lot of new businesses signing up to pay VAT, and has reportedly brought in an extra £200 million for HMRC.
Following this news, we think it’s fair to say this policy has been delivered. We’ll update this page with any new reports of online VAT fraud reductions (for example from the National Audit Office). In the meantime, this policy is ‘done’. Follow this policy to hear about further developments.
- Amazon and eBay evict sellers amid VAT crackdown – BBC
- Progress in tackling online VAT fraud – Forty-Ninth Report of Session 2017–19 – Parliament.uk (PDF)
- HMRC’s press release on its new measures to tackle online VAT evasion – Gov.uk
- Investigation into overseas sellers failing to charge VAT on online sales – National Audit Office
- Apply for the Fulfilment House Due Diligence Scheme (Notice FH1) – Gov.uk
- Value Added Tax – Wikipedia
- HM Revenue & Customs (HMRC)
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