HMRC is Targeting eBay & Amazon Sellers
Ecommerce has been around for a long time now – and anybody can get involved thanks to online marketplaces such as eBay and Amazon. But not all sellers are paying their fair share of tax, according to the latest figures.
In this post, we’ll explore why and how Her Majesty’s Revenue and Customs (HMRC) is targeting online sellers – and how to avoid any penalties for your ecommerce business.
The rise of ecommerce
With their growing popularity, it’s no wonder HMRC has decided to take a closer look at ecommerce businesses. Whether it’s food, electronics or Christmas presents, we’re all slowly but surely turning to the internet for our shopping. It’s quicker, more convenient and in most cases cheaper, as you can compare several providers from the comfort of your own home.
The problem? The nature of their business makes them harder to keep tabs on. In most cases, sellers have no physical presence, such as a brick-and-mortar store, meaning there’s no clear way to contact them. They could also be based overseas, making it harder for HMRC to chase them.
£585 million owed in VAT
With all that in mind, it comes as no surprise that HMRC is reportedly owed £585 million in VAT by online sellers. The majority of this – a whopping £315 million – is accounted for by VAT-registered companies who have simply not paid, or underpaid their VAT. These companies have been contacted directly by HMRC with a demand to pay what’s due.
However, a further £270 million of unpaid VAT is owed by sellers who haven’t even registered for VAT. To clarify, any company with an annual turnover exceeding £85,000 is required to register for VAT, paying a 20% for anything they sell.
eBay and Amazon
With regards to unregistered companies, one of the biggest issues is with online merchants selling through ecommerce platforms like Amazon and eBay. Needless to say, this complicates things as it’s not clear who’s to blame – the sellers, or the platforms themselves for allowing them to continue selling?
Despite some obvious fault lying with the sellers who avoid paying VAT, HMRC is targeting the platforms to take action. They have reportedly sent almost 9,000 letters to sites like eBay and Amazon, explaining that they could foot the bill on behalf of their sellers if they fail to stop them selling without paying VAT.
Don’t be caught out
When it comes to tax, it’s always better to be compliant than negligent or bending the rules. HMRC catches up with almost everyone eventually, and there is always a price to pay. That price will be completely out of the blue and could cause significant disruption to your business
At UWM Accountants in Leeds, we make sure all our clients are fully compliant and tax-efficient, so you can pay out a manageable amount as VAT, rather than having to face unexpected costs. If you would like any help with your company’s VAT, feel free to get in touch with our team.
Call us on 0113 231 0202 to talk to a VAT expert.