Online retail giants Amazon and Ebay have been accused by MPs of “turning a blind eye” to criminals and benefiting from tax evasion.
At a meeting of the public accounts committee which is investigating VAT fraud, MPs told the companies‘ executives that they were ignoring organised criminals from China, illegally selling products into the UK market without paying VAT, undercutting UK businesses.
Labour MP Caroline Flint criticised both the retailers for failing to stop fraudsters from using their platform, accusing them of actively encouraging it and charging them a fee.
“Whatever your relationship to the seller, the byproduct of Amazon and eBay and other online marketplaces is that you are profiting from the evading of tax by these overseas sellers,” Flint said.
Ebay vice president Joe Billante responded: “We don‘t want any of these sellers on our platform. If we are notified, we take action.”
Amazon‘s Steve Dishman said: “We need all sellers to compete equally. That is what we are focused on.”
The UK‘s online marketplace is currently the biggest in Europe, accounting for around 14.5 per cent of retail sales last year.
It is estimated that overseas fraudsters failing to register for VAT costs the UK around £1.5 billion a year.
All sellers outside of the EU selling to the UK market are required to charge VAT if their goods are already in the UK at the point of sale.
Many sellers import goods and store them in fulfillment centres before selling them through these platforms.
Retailers Against VAT Abuse Schemes‘ Richard Allen explained: “20 per cent is a large sum of money, and if your competitors are avoiding the 20 per cent you can‘t compete.”