HMRC 'reluctant' to crack down on VAT fraudsters – tax ace

EU law professor claims eBay and Amazon obliged to police VAT fraud

HMRC could be reluctant to crack down on VAT fraudsters selling goods online without declaring VAT because of the costs involved, a European tax expert has claimed.

Rita de la Feria, a professor in tax law at Durham University, claimed that Amazon and eBay may be liable for VAT if they do not take due diligence and ask questions of their suppliers; for example, prices that are too low or inability to provide VAT numbers should raise flags.

However, she claimed HMRC is being slow to apply the principle to force sellers to police fraudsters selling goods on their platforms.

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.

The practice is also thought to be undercutting a number of small sellers who are unable to compete against fraudsters.

Feria said: "I doubt there will be a case immediately. But if HMRC starts asking questions based around the legal principle, which is now sufficiently strong, that could be a stick for Amazon and eBay."

However, she said: "HMRC may be trying to avoid [acting] as the legal costs of this will be high."

Under the Kittel principle, third parties are legally obliged to police VAT fraud, said Feria. Since the principle was first introduced there have now been an "extensive" number of cases across Europe, she said.

She said pressure will start building for HMRC to take action against third parties under this principle.

In a statement, eBay said: “eBay reminds all its users of their need to comply with their legal obligations and we also provide helpful guidance on VAT through our Policies and Help pages with the aim of providing a safe and fair marketplace for all our buyers and sellers. If eBay sellers are found to be breaching UK VAT compliance rules, we will cooperate with HMRC in all cases where HMRC provides evidence of underpayment of taxes.”

An Amazon spokesman told the BBC: "Marketplace sellers are independent businesses responsible for complying with their own VAT obligations," an Amazon spokesman added.

"We do offer tools and information to assist sellers with their compliance, but we don't have the authority to review their tax affairs. Naturally we cooperate with HMRC as we are required to by law."

‎An HMRC spokesman told The Register: "HMRC is fully aware of the allegations of fraud in this area. We have for some time been actively involved in carrying out a programme of enquiries into suspect businesses and conducting intelligence research.    "The reported frauds affect not just the UK but other EU Member States. We are working in partnership with the European Commission and other Member States to tackle the compliance problems in this field.‎" ®


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