UK Says Its Losing More Than $1B Thanks To Fraud, Errors On eBay, Amazon Marketplaces

The U.K. is losing as much $1.28 billion each year in value-added tax (VAT) due to fraud or errors from sellers who use the marketplaces of eBay and Amazon, reported Reuters.

The report, citing the National Audit Office (NAO), reported that the NAO said sellers who are committing the fraud are often located in China and that Trading Standards, the U.K. consumer regulator, found Amazon and eBay failed to remove the sellers despite being alerted to their noncompliance. Reuters noted that retailers that sell goods to customers in the U.K. have to collect a VAT of 20 percent of the value of the products sold, which goes to the UK government. eBay told Reuters it is committed to making its platform fair.

“We will continue to work closely with (British tax authority) HMRC to ensure that all sellers on our platform comply with the law,” eBay said in an emailed statement to Reuters. Amazon declined to comment on the report. The NAO said in the report new rules that are geared toward making operators of marketplaces liable for non-VAT payment would help fight the problem and that eBay and Amazon support that rule. The NAO did note that Amazon is against another in which marketplace operators have to conduct due diligence checks on their overseas customers. Amazon felt this was “disproportionate and ineffective,” the NAO said, according to Reuters.

In January, Funding Options, the marketplace lending platform, said SMEs in the nation owe nearly $3.25 billion in overdue VAT, a sign of cash flow management challenges. Funding Options pointed to late B2B payments in particular as a key factor behind why small businesses are struggling to pay their taxes. That means SMEs are facing late payment penalties from HMRC, the U.K. tax body, reports noted, and also face the threat of tax collectors. Even if a corporate client pays an invoice late, the VAT on that invoice must be paid, Funding Options explained.