Will the UK Budget target non-EU online retailers to raise VAT revenues?
Ryan Bevan 15 March 2016 No comments
Are anti-VAT fraud measures aimed at non-EU online retailers selling in to Europe going to feature in Chancellor George Osborne’s 2016 Budget?
Tomorrow the UK Chancellor of the Exchequer, George Osborne, will deliver his 2016 Budget and share with us his plan for making the UK economy stronger and more stable in 2016 and beyond. Part of those plans is expected to be some measures to clamp down on foreign online traders importing and selling goods to UK individuals and not charging (and then paying over) the right amount of VAT.
A while ago we posted a VAT news item about non-EU online retailers selling goods to customers in the UK via online marketplaces such as eBay and Amazon without registering for VAT or charging VAT on sales to the UK. In not complying with the UK VAT rules, they were effectively undercutting UK providers of the same goods and creating an unequal online playing field.
At the time of writing, HMRC had been using a web robot in an attempt to identify those not complying with their UK VAT obligations. The robot used is an advanced search engine designed to spot high volume traders that are failing to register for VAT in the UK. Initial estimates were that this initiative would bring in an extra £1m of VAT revenues a year.
HMRC said: “We recognise concerns that businesses and individuals trading online may appear to be less transparent to the authorities and that those involved may be less compliant. However, we are cracking down hard on all forms of tax evasion, regardless of where it occurs or who commits it. We are determined to tackle deliberate non-compliance to ensure that the tax system operates fairly and efficiently to create a level playing field for all.”
However, since these statements were made in 2015. what has been done by HMRC to crack down on those non-EU retailers not registering for VAT in the UK? The answer appears to be very little. However, an article in the Financial Times on Monday outlined a few potential options Mr Osborne could take to make progress on this issue. One such measure is to shift the obligation of the reporting to the marketplaces such as Amazon, (especially those traders operating under the Amazon FBA programme) and enforce them to check whether their sellers have a valid VAT number where/when required. Some commentators have compared this measure to the government making banks, legal and financial services companies responsible for monitoring anti-money laundering.
Wednesday’s Budget announcements will be keenly observed for any changes in the UK VAT rules.