The Guardian has reported that:
Amazon is quietly rooting out many of its Chinese traders who do not hold UK VAT numbers to try to protect itself from tax evasion inquiries later this year when new HMRC powers come into force, the Guardian has learned.
The online retailer has been conducting a review of sellers’ VAT compliance in the UK. It is understood to have contacted many Chinese sellers, giving them until the end of the month to provide their VAT numbers.
So here are some questions.
First, why did it take one man – indefatigable VAT campaigner Richard Allen – to make this happen?
Second, why did this only happen when Richard got Rob Marris of the Labour Treasury team on board?
And third, if Amazon knew of this risk why did they not act before now when the cost may have been £2 billion a year to the UK?
If think the first is for HMRC and the Treasury to answer, the second for David Gauke MP and the third for Amazon.
I will be happy to post replies.
The answer is exactly the same reason that markets work. Somebody potters about, observes the world, ruminates, comes up with an idea and tries it out. It’s also why planned economies don’t work – note that HMRC, Gauke, the government, Ritchie the tax campaigner and that centralised organisation Amazon (yes, as Chris Dillow repeatedly points out, corporations are islands of planning in the free market sea) did not spot it. That centre will never have enough information to be able to either understand or plan something as complex as an economy.
Some random obsessive spotted this and changed how things work. That’s as good an explanation of Ford and his moving assembly line as it is of VAT campaigning.
Markets work precisely because they tap into that distributed knowledge, not rely upon that within whatever is the governing or planning structure.