‘VAT fraud is damaging the reputation of innocent etailers’

PC retailers are backing a petition to stop VAT fraud on eBay and Amazon by Chinese, Non-EU and UK businesses, as indies are worried that these issues are affecting their own reputation.

“I believe it’s things like VAT fraud by some online IT retailers that damage the reputation of all etailers in the channel,” Brian Trevaskiss, head of marketing at More Computers, told PCR.

“Some vendors and distributors try to prevent online retailers from selling their products, they see some etailers driving prices down and they get pressure from their non-etail customers.”

“The result is all etailers suffer because of the unscrupulous ones,” said Trevaskiss. “The law abiding, ethical etailer can’t compete with the prices of those not paying VAT and they can’t compete on the products they are not allowed to sell.

“It’s probably the biggest thing affecting our growth.”

The petition claims that billions of British pounds are being laundered out of the UK by non-EU companies on eBay and Amazon, with UK fulfilment centres dispatching their stock.

“It’s a big deal for those of us who sell online and probably every independent retailer,” added Trevaskiss.

Currently, retailers have to register for VAT in relevant countries, file on-going VAT returns and deal with different tax authorities in different languages when sales thresholds, which differ widely between member states, are breached.

Now the European Commission (EC) has launched a public consultation on modernising VAT for cross-border e-commerce. The EC would like to streamline the process to stop ‘leakage’.

In other VAT news, it has been revealed that Facebook UK is paying less than £5,000 in corporation tax last year.

"This is yet another example of a billion dollar company that makes significant profits in the UK yet somehow fails to pay any meaningful tax on them,” commented Crawford Spence of Warwick Business School, a professor of accounting.

“There is no suggestion that the company is not compliant with UK tax laws, so the question really arises as to whether Facebook has a moral responsibility to pay tax beyond what the law requires them to? Or whether the tax laws themselves are too complex and permissive?

"Historically, speaking to the moral character of corporations has rarely resulted in behaviour change, so if the UK wants companies that make huge profits to also pay tax then it will have to alter the regulations that surround them. Internationally, there are just far too many loopholes and complex arrangements available to corporations."

Image source: Shutterstock

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