HMRC is responsible for investigating companies and individuals who failed to disclose VAT when selling goods online. However, according to Rita de la Feria, a professor in tax law at Durham University, HMRC isn’t intervening due to EU law and soaring legal costs. Additionally, she discussed the legislation which demands companies like eBay to properly inform users of their legal obligations. As a result, Amazon and eBay could legally be charged billions in pounds of unpaid VAT if they do not properly safeguard against VAT fraudsters. La Feria said:
“I doubt there will be a case immediately. But if HMRC starts asking questions based around the legal principle, which is now sufficiently strong, that could be a stick for Amazon and eBay.”
“HMRC is trying to avoid [acting] as the legal costs of this will be high.”
eBay responded to these claims and released a statement which reads:
“eBay reminds all its users of their need to comply with their legal obligations and we also provide helpful guidance on VAT through our Policies and Help pages with the aim of providing a safe and fair marketplace for all our buyers and sellers. If eBay sellers are found to be breaching UK VAT compliance rules, we will cooperate with HMRC in all cases where HMRC provides evidence of underpayment of taxes.”
As with any legislation, the finer details are quite complicated. EU law takes precedence over UK common law, which means the company’s trading with a EU base have to uphold their legal responsibilities. Although, HMRC isn’t doing enough and needs to apply pressure on large corporations.