vatfraud.org

In 2015 I setup the online campaign vatfraud.org to expose HMRC’s failure and incompetence in tackling the £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.

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!

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 onTackling 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

Financial Times

The Guardian

BBC

Daily Mirror

Daily Mail

The Register

Miscellaneous Press

Parliament TV

HMRC

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.

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