British MPs accuse Amazon, eBay of abetting online tax fraud

Online retailers Amazon and eBay are facing accusations of profiting from a multibillion-pound tax fraud and "turning a blind eye" to the problem.

Senior company executives were questioned by MPs at a meeting of Parliament's Public Accounts Committee (PAC) yesterday. The lawmakers also criticised the companies for not doing enough to tackle the problem.

According to HM Revenue and Customs' (HMRC) estimates, taxpayers must have lost £1.5 billion from overseas sellers illegally selling goods into the UK without paying VAT.

Consequently, many small UK businesses are struggling to survive as prices are undercut, according to the MPs.

Labour MP Caroline Flint asked Joe Billante, an eBay vice-president, and Steve Dishman, a vice-president at Amazon, to admit they were profiting from the activity.

"You are profiting from the evasion of tax by these overseas sellers. Is it not a fact that if you have overseas sellers using your marketplace, and you are taking money from them for every product sold on your online marketplace, whether intentionally or not, the system is creating you as profiteers from the evasion of tax." she said.

"We are talking about billions of pounds of VAT, which is being lost to the HMRC and to the UK,'' she added.

"It is putting out of business legitimate businesses that are playing by the rules."

According to the MPs, the online retailer was ''turning a blind eye'' to organised criminals from China and elsewhere who sell their goods cheaply on internet auction sites – but do not register to pay VAT.

The scam funnels £1.5 billion a year from Treasury coffers and lets the sellers undercut law-abiding UK traders, forcing them to fold or lay staff off.

According to the MPs since online retailers take a commission from the total that tax-evading traders make, they receive more money from them than if the 20 per cent VAT was paid – letting them 'profiteer' from the fraud.

Foreign firms selling on internet auction sites need to register with HMRC to obtain a VAT number. The VAT would typically be added to the cost of the product, making it more expensive to shoppers.