vatfraud.org
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.
The new regulations came into force on 1st January 2021 and generated £1.4bn in additional VAT revenue in its first year.
Similar laws have been introduced by the EU and adopted by the OECD, who recommend the laws are implemented around the world.
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HMRC’s estimate of the impact of online VAT fraud is out of date and flawed.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 Campaign
In 2014 my 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.
I researched the fraud and VAT evasion laws. It quickly became evident that £billions of pounds was being evaded. I compiled a comprehensive report for HMRC detailing the scale of the fraud and how it worked. HMRC ignored it. So, in 2015 I decided to use my web expertise and 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. 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.
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 had 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, gave in-depth briefings on how the fraud worked and provided 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. 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.
The Times
- HMRC relies on amateurs to fight VAT fraud
- HMRC refuses to reward tax whistle blower
- Revenue and HMRC tackle VAT dodgers
- Are Amazon and eBay the villains of VAT?
- Amazon must take responsibility for its sellers’ unpaid VAT
- Emails throw doubt on Amazon claim of crackdown against tax fraud
- Amazon in £1.5bn tax fraud row. Web giant accused of profiting from evasion
- Online retailers failed to pay up to £1.5bn in VAT last year, says watchdog
- Amazon and eBay failing to tackle £1.5bn tax dodge
Financial Times
- UK lost up to £1.5bn from VAT evasion by foreign online retailers
- Online sales clampdown nets VAT registrations
- Overseas online retailers face crackdown
- Osborne plans crackdown on tax avoidance by multinationals
- Overseas e-retailers face VAT crackdown
- Online tax evasion growing and ‘very big issue’, warns Revenue
- MPs accuse Amazon of being ‘morally complicit’ in sales tax fraud
The Guardian
- Online retailers failed to pay up to £1.5bn in VAT last year, says watchdog
- Amazon and eBay turning blind eye to VAT evasion, say MPs
- MPs poised to investigate VAT fraud on Amazon and eBay
- Brussels to crack down on VAT fraud by firms shipping goods to EU
- Amazon and eBay sellers’ VAT fraud rife despite crackdown
- Osborne targets overseas sellers on Amazon and eBay in VAT clampdown
- Amazon and eBay to be held liable for VAT fraud by sellers
- Amazon and eBay face crackdown over VAT fraud by overseas sellers
- UK losing millions in VAT from non-EU sellers on Amazon and eBay
- Tax inspectors raid warehouse containing £500,000 of illegal goods
BBC
Daily Mirror
- VAT evading Chinese firms are wiping out British business
- These Chinese sellers on eBay should be paying VAT – so why are they listing other people’s VAT numbers?
- eBay insists these Chinese sellers are VAT registered – so why won’t they reveal their VAT numbers?
- Why isn’t more being done about the foreign eBay sellers who cheat us all by not paying VAT?
Daily Mail
- Amazon ‘turns a blind eye’ to £1.5bn VAT fraud which sees foreign sellers undercut law-abiding British traders
- Internet sellers in £1.5bn VAT dodge: HMRC accused of failing to crack down on scam that sees criminal gangs using online marketplaces to avoid tax
- Probe is launched into £7bn-a-year ‘import tax dodge’ by overseas traders on eBay and Amazon
The Register
- MPs accuse Amazon and eBay of profiteering from VAT fraudsters. HMRC: About £1.5bn lost due to overseas sellers’ tax swerve
- Osbo slaps down Amazon and eBay – who’ll be liable for traders evading VAT
- Brit iPad sellers feel the pain of VAT-free imports
- Crackdown on eBay sellers ‘failing to display’ VAT numbers
Miscellaneous Press
- Reuters: Britain loses 1 billion pounds through VAT fraud and error by Amazon and eBay sellers
- The Independent: Amazon and eBay putting UK firms out of business by ignoring tax fraud by foreign firms, say MPs
- The Sun: VAT’S UNBELIEVABLE Amazon ‘is turning a blind eye to a £1.5bn tax dodge that’s driving Brit firms out of business’
- Retail Gazette: Amazon & Ebay accused of profiting from VAT tax evasion
- Yahoo!: Amazon and eBay criticised by MPs for ‘turning blind eye’ to tax fraud on sites
Parliament TV
- Budget 2016 Announcement (starts at at 13:01:35)
- Lin Homer was grilled by the Commons Select Committee about online VAT Fraud (starts at 15.54)
HMRC
- HMRC list of deliberate tax defaulters
- VAT and overseas goods sold to customers in the UK using online marketplaces
- VAT: overseas businesses and joint and several liability for online marketplaces
- Online marketplace seller checks
- HMRC and online marketplaces agreement to promote VAT compliance
- Businesses selling goods in the UK using online marketplaces
- VAT representatives for overseas businesses and joint and several liability for online marketplaces
- Extending joint and several liability for online marketplaces and displaying VAT numbers online
- Fulfilment house due diligence scheme
06. Reward
HMRC gave Julius and I 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 my intension to become a VAT campaigner or activist. When I first reported the fraud to HMRC, I naively believed they would swiftly close it down. How little did I know. The incompetence of HMRC’s policy makers has been staggering.