Amazon’s Guilty, Amazon’s Guilty!

The Guardian, BBC and others have covered an unfolding story of massive VAT evasion as a result of distance selling from China (and maybe other locations) into the UK and other EU countries using false VAT numbers or incorrect disclosure of the value of goods on import to evade tax owing in this and other countries.
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Third, the question then arises as to whether or not the VAT can be recovered. Since it is highly unlikely that customers of either Amazon or eBay knew or even had any reason to think that they were party to VAT fraud UK law as it has stood since 2006 seems to entirely protect them from liability under what is known as the Kittel Principle.

Hmm, so, what is actually being alleged?

Customs officers are aware that some overseas sellers are under-declaring the value of goods shipped to the UK and other European destinations in order to qualify for VAT exemptions on low-value packages.

“You’re getting packages which the [online] customer might have paid €100 [£70] for. And they’re coming in [through customs] identified as €20, or as gifts. And that’s the abuse,” said the source, who has close knowledge of the subject.

That customs invoice will be seen by the consumer. Thus the consumer knows. ‘T’ain’t Amazon, is it, who never sees that invoice.

18 thoughts on “Amazon’s Guilty, Amazon’s Guilty!”

  1. Oh, the poor, poor customer: undercharged on VAT by an unscrupulous Asian merchant.

    Didn’t the dickheaded SJWs campaign a few years back for British customers to pay VAT on books, or something? Ta very much.

  2. It’s a shame the great Peter Simple isn’t alive to satirise him – He’s like a combination of Dr. Heinz Kiosk, Dr, Spacely-Trellis ‘The Go Ahead Bishop of Bevindon’ and General ‘Tiger’ Nidgett’ – Truly one of the greatest idiots of this (or any) age…..

  3. I’m not sure at this point that this is doing anything but selling to the SJWs. I bought a coffee in Starbucks the other day and it didn’t look like they were short of customers. Amazon are worth a few gazillion quid.

    And personally, good. Not so much because of the VAT but because the Post Office then charge 8 quid to collect the extra VAT when they deliver. Fuckers.

  4. @TimN, it does however mean that home-based retailers are not competing on a level playing-field.

    More generally, of course customs do indeed go after the importer for the VAT, but a lot of this is never determined because the goods are fraudulently labelled (by the sender not the recipient, not that the customs at least in Germany seem to care about that distinction) at a lower price to reduce/eliminate the VAT due.

  5. It occurs that if you receive taxable goods with an underdeclared value you probably have some obligation to inform the revenue and pay the difference, and that it’s fraud not to do so. I doubt there’s an easy way of doing that for stuff that comes in the post.

  6. BiG,

    Yes. Let’s have an army of inspectors to arrest or fine people for skipping out on a couple of quid on a Blu-Ray set.

    Really, VAT’s just a stupid tax. At one time it was probably a tax on rich people when most people made their own cakes, darned their socks, and hand-rolled their tampons, but it affects almost everything today. Just stick a few more pence on tax at the richer end or up council tax and be done with it.

  7. As someone who delights in buying direct from the Chinese supplier, thereby making both him and me richer, you don’t know what the customs declaration will say until you get the package.

    If you haven’t yet discovered aliexpress, you should. It’s brilliant. But, be aware that it’s not *always* cheaper than Amazon, although it usually is.

  8. Amazon see the buyer receipt – they provide it to the seller.
    What they cannot see is the VAT receipt, nor can they know what declaration the seller uses.

    So nothing to do with amazon.

    People go on about foreign sellers. The UK sellers who avoid registering are a similar problem.

  9. Van Patten

    Indeed. I would have loved to have seen Murphy engaged in correspondence by Henry Root, and for the exchange then to have been published in the Henry Root letters.

    Given Murphy’s sickening propensity for self-preening I imagine he would have been easy meat – I see Roger Mellie still survives and is making current comments on his blog.

  10. Well the UK could introduce a new law requiring “marketplace” companies to automatically charge VAT, rather than merely facilitating payment. A small volume of purchasers will switch to Aliexpress (thanks abacab), but most people prefer to receive their goods asap, not in ten days.

    Or you could abolish VAT, but that’s really throwing out the baby with the bathwater.

  11. Given that Ebay aren’t in the billing and payment chain, I struggle to see how they could be involved. They could require that sellers are registered for VAT, but they would have no way of checking whether filing or payment obligations are complied with.

    Amazon are in the billing chain, and so would be in a position to withhold VAT from sales where it is due. On the other hand, this would oblige them to determine the VAT liability of each item, which is not necessarily simple. Also, as the output VAT should be accounted for by seller, matching up the VAT withheld by Amazon with the liability of the seller would be technically rather complex. I imagine some people wouldn’t mind if Chinese sellers lost out on cash that belongs to them, of course, but it does seem a bit unfair.

    I suppose you could simply have Amazon assume that everything is VATable and pay 1/6 of all third-party sales to UK customers over to HMRC. But that would then mean you’d have some parcels coming into the UK VAT-paid, and some (non-Amazon ones) not, and no reliable way to distinguish between them; also, where sales are not standard-rated the seller would have to have some way of recouping the VAT from HMRC.

    What it all comes down to is that HMRC need to be more rigorous in enforcing import VAT rules. Or we need to accept that in practice there will be leakage.

  12. @AndrewM,

    ISTR AliExpress were claiming that they were looking at warehousing in the US and Europe to improve delivery times. But since their model is more “Amazon Marketplace” than “Amazon” pur sang I’m not sure what will come of that idea.

    China Post, HK Post etc. small packets seem to take anywhere from 1 week to 4 weeks to appear – it really is quite variable.

    If I *really* want something quickly, it’s Amazon FR or DE. Or cough up for DHL on Aliexpress, but even that’s not as quick as Amazon.

  13. So, here’s the latest score:

    It is outrageous for doctors to be involved in billing foreigners for emergency treatment as “they are not border guards”.
    However, it is entirely reasonable for Amazon to be responsible for VAT paid on imported goods even though they are not “border guards”.

  14. Rob>

    “It is outrageous for doctors to be involved in billing”

    Just stop that one there and go tell it to anyone from the US… 🙂

  15. Nice to know the Graun’s now accepting liability for any goods obtained through a Guardian ad. I might try their dating service.

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