HMRC claims its online tax evasion crackdown has clawed back £200m
The government claims to have recovered more than £200m of lost VAT from overseas sellers since gaining new powers, saying its crackdown on online tax evasion is paying off.
HMRC has issued over 4,600 ‘red flag’ notices to online marketplaces such as Amazon and Ebay since 2016.
The flags, called Joint and Several Liability (JSL) notices, are aimed at stopping overseas sellers from undercutting UK-based businesses’ prices online.
Online businesses, often based in China, illegally sell into the UK at a lower cost by avoiding tax registration. HMRC has previously put the cost of such evasion at around £1.5bn, a figure MPs have called an underestimate.
The number of overseas businesses making applications for VAT registration grew to 58,000, in comparison to just 1,650 applications between 2015 and 2016.
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Online marketplaces are required to check if overseas sellers using their platform should be registered for VAT, and can be liable for tax owed if they failed to do so.
Seven online retailers, including Amazon, Ebay, Etsy and Asos have signed a commitment to clamp down on illegal activity via their websites.
Phone cases, cosmetic products and kitchen utensils are among the products most commonly flogged by VAT evaders.
Mel Stride MP, financial secretary to the Treasury, said: “These figures show that HMRC, working closely with the major online marketplaces, is making real headway tackling this serious and damaging evasion.”
Emma Jones, founder of small business support network Enterprise Nation, said: “These rules protect the hundreds of thousands of legitimate sellers who are simply trying to run a business via online marketplaces, we give it our full support.”