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MPs from the Public Accounts Committee have warned of Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY) profiting from online VAT fraud, whilst criticizing the HMRC for being “too cautious” in pursuing the “fraudsters”.
The parliament’s spending watchdog found that marketplaces that are run by Amazon and eBay are allowing companies from abroad to sell items without paying the 20 percent VAT.
“Online marketplaces tell us they are committed to removing ‘bad actors’, yet that sentiment rings hollow when those same marketplaces continue to profit from the actions of rogue traders,” said Meg Hillier, the committee’s chair.
The report said that it was “bewildering that these big companies have taken such little action to date,”
“Amazon and eBay, among other online marketplaces, continue to profit from fraudulent activities taking place on their sites,” it added.
The Public Accounts Committee went on to criticise the HMRC for its lack of action, who “has not named and shamed non-compliant traders and so far has not prosecuted a single seller for committing online VAT fraud”.
Retailers Against VAT Abuse Schemes, a pressure group, said that said HMRC had shown a “complete dereliction of duty” for tackling online fraud.
A spokesperson from the HMRC said: “We introduced tough new rules last year allowing us to hold online marketplaces liable for unpaid VAT by overseas sellers.
‘The new reforms will secure an extra £875m in tax to help pay for vital public services,”
An Amazon spokesman said: “We offer extensive information, training and tools to assist sellers in their VAT obligations, and we work closely with HMRC on this matter,”
Both Amazon and eBay have said that they plan to remove “bad actors” from their marketplaces.
Online purchases have rapidly increased from two percent of retail sales in 2006 to 14.5 percent in 2016. The issue of VAT fraud is likely to get even more complicated in the wake of Brexit.