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Amazon and eBay Sellers' VAT Fraud Rife Despite Crackdown (theguardian.com)
Huge numbers of VAT fraudsters are illegally selling goods tax-free to British shoppers on Amazon and eBay, despite new government efforts to crack down on this ballooning 1bn pound VAT evasion crisis, reports the Guardian. From the article: A Guardian investigation found a wide variety of popular goods being illegally sold without VAT on Britain's leading shopping sites. They range from cheap Christmas tree lights, electric toothbrushes and thermal socks to expensive laptops, iPads, music keyboards, violins and pingpong tables. In some cases, VAT fraudsters offer unbeatable prices. Mostly, however, their prices remain in line with law-abiding competitors and the proceeds of evasion disappear overseas, often to China. Guardian investigations found many tax-evading sellers were trading without displaying VAT numbers on Amazon or eBay. Others were showing made up numbers, or numbers cloned, without authorisation, from unsuspecting legitimate businesses.
To be honest VAT has always been a disaster waiting to happen, and inside the European Union it is an unmitigated nuisance to enforce.
VAT, you see, isn't a sales tax. When one company sells stuff to another one, it charges VAT on the deal which the other company can then claim back. In a chain of businesses, this carries on until the end user gets stung with the final VAT charge. This therefore lends its self to a criminal activity called Carousel Fraud, whereby VAT-liable goods are moved around, with VAT being fraudulently claimed back repeatedly. Carbon credits are the current favourite target here, since they are intangible and thus shipping costs are minimal.
Carousel fraud costs the EU thousands of millions of Euros per annum in lost revenue, and probably the same again in administration costs. As taxes go, it is a fraudster's wet-dream and a tax enforcer's nightmare and yet, as with much of the EU, it is a bad idea that is effectively here to stay.
Simply ignoring VAT, as is going on here, is another downside to it; it is simply near-impossible to catch all the fraudsters doing this, since almost no customers will trouble to report people for giving them a good cheap deal.