Vatfraud.org

Our campaign tackling a £1.5 Billion Online VAT Fraud.

Vatfraud.org

The Campaign.

In 2015 Neven setup the online campaign vatfraud.org to expose HMRC’s failure and incompetence in tackling a £1.5 Billion Online VAT Fraud being committed by overseas sellers on marketplaces such as Amazon and eBay.

The campaign received a huge amount of coverage in the press, on the radio and on TV. It gained the attention of policy makers around the world, including the Director General of EU Tax.

On 20th November 2020 HMRC finally announced new regulations that made online marketplaces responsible for collecting VAT from overseas sellers.

Similar laws have been introduced by the EU and adopted by the OECD, who recommend the laws are implemented around the world.

The new regulations came into force on 1st January 2021 and generated £1.4bn of additional VAT revenue in its first year in the UK.

In the EU the regulations generate £7.5bn of additional VAT revenue per year.

Testimonials

Who would have ever believed it!

The Government

Office for Budget Responsibility

★★★★★

It is now expected that the new measures will generate £1.4 billion in 2021-22, rising steadily to £1.8 billion by 2026-27, a fivefold increase on the previous estimate.

Jim Harra

Chief Executive of HMRC

★★★★★

The new VAT rules for online sales have prompted huge numbers of overseas sellers to register for VAT. It is a good news story, because it points to those measures bringing in much more than we had anticipated.

Public Accounts Committee

Tackling Online VAT Fraud and Error Hearing

★★★★★

HMRC’s estimate of the impact of online VAT fraud is out of date and flawed. HMRC has been slow to get to grips with the problem and is not yet doing enough to tackle it.

National Audit Office

VAT Evasion by Overseas Online Retailers Report

★★★★★

Online VAT fraud and error causes substantial losses to the UK Exchequer and undermines the competitiveness of UK businesses.

The Times

HMRC relies on amateurs to fight VAT fraud

★★★★★

HMRC are using vatfraud.org website with no budget or staff to help tackle £1.5 billion of online VAT avoidance. In the past four months HMRC investigators have spent 70 hours on the website and visited it more than 1,200 times.

01. The Fraud

In 2014 our online retail business had seen it’s sales literally wiped out overnight as Chinese sellers flooded into the UK, with Amazon providing them with UK fulfilment services. Most of the sellers were evading VAT, giving them a 20% price advantage. It was impossible to compete. Amazon and eBay turned a blind eye.

We researched the fraud and VAT evasion laws. It quickly became evident that £billions of pounds were being evaded. We compiled a comprehensive report for HMRC detailing the scale of the fraud and how it worked. HMRC ignored it. So, in 2015 we decided to use our web expertise to launch the vatfraud.org campaign and make my report public.

Richard Allen from Retailers Against VAT Abuse Schemes and Julius Oliveti soon joined the campaign. Together we gained much media attention, political backing and changed the law.

02. HMRC

We had meetings with the heads of the EU VAT Unit and Anti Fraud Unit in Brussels before HMRC started to engage with us. By that time, we had generated front page negative press on HMRC’s failure to tackle the fraud.

We met with David Gauke MP, Financial Secretary to the Treasury, in October 2015, who instructed HMRC to meet with us.

We then spent five years consulting with HMRC, providing hard facts and evidence on the fraud and what laws and regulations needed to be implemented.

During that time HMRC introduced several failed policies, which we had advised them wouldn’t work. It was only in 2020 that they introduced the regulation that we had been campaigning for, which makes marketplaces responsible for collecting VAT.

HMRC also failed to understand the scale of the fraud, estimating the new regulations would bring in £300m a year. We had always estimated they would bring in around £1.5bn a year.

We were proved right.

03. Reward

HMRC gave Julius and Neven a £15,000 reward each. However, they decided not to give Richard a reward and gave no explaination why. So we split our rewards between the three of us.

It’s estimated that HMRC has lost £9.5bn to the fraud since 2014.

It was never our intention to become a VAT campaigner or activist. When we first reported the fraud to HMRC, we naively believed they would swiftly close it down. How little did we know. The incompetence of HMRC’s policy makers has been staggering.

04. Political Backing

Lords, PMs and Cabinet Ministers

We were fortunate to get the backing of some very good cross-party Lords, PMs and Cabinet Ministers. They were an enormous help in getting the fraud onto the political agenda and pushing the new regulations through parliament.

Public Accounts Committee

On 13 September 2017 the PAC held a hearing on “Tackling online VAT fraud and error inquiry” with the heads of HMRC, eBay and Amazon.

We worked with the PAC providing evidence, giving in-depth briefings on how the fraud worked and providing questions to ask at the hearing.

My favourite question was when the CEO of Amazon was asked if they profited from VAT Fraud. He evaded the answer, so to speak.

National Audit Office

In conjunction with the PAC hearing, we helped the NAO carry out their “VAT evasion by overseas online retailers” investigation, looking at the risk of VAT evasion by overseas online retailers. The investigation focused on HMRC’s role in administering the VAT system, including managing and reducing risks to the collection of tax revenue.

05. Meetings

Meetings with the heads of the EU VAT Unit in Brussels.
Meetings with the heads of the EU Anti Fraud Unit in Brussels.
Meetings with Chief of Police in Brussels.
Meetings with Lords, MPs and Cabinet Ministers.
Meetings with the heads of the Public Accounts Committee.
Meetings with the heads of the National Audit Office.
Meetings with the heads of Trading Standards.
Meetings with VAT and Fiscal Policy Professors.
Debates in the House of Lords.
Debates in the House of Commons.
Discussions with European Anti-Fraud Office (OLAF).
Tea and scones in the House of Lords tearoom.
And finally meetings with the heads of HMRC in Whitehall.

06. Press Coverage

Panorama

We worked with the Panorama team for several months providing evidence for the program “The Billion Pound VAT Scam” which was televised on 27 November 2017. The programme highlighted how overseas VAT evaders were forcing British companies out of business and costing the taxman billions a year.