Online Marketplaces: VAT Evasion

Lord Leigh of Hurley Excerpts

Monday 22nd October 2018 Lords Chamber

Asked by

[Lord Leigh of Hurley]

To ask Her Majesty’s Government what steps they are taking to ensure that operators of online marketplaces take all reasonable steps to mitigate VAT evasion.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the UK is the first country in the world to make online marketplaces jointly and severally liable for VAT fraud committed on their platforms. Since 2016, HMRC has received around 43,500 VAT registration applications from non-EU based online sellers, which compares with 1,650 in 2015.

[Lord Leigh of Hurley (Con)]

This issue is of course important to UK high street retailers which are facing intense competition from Amazon. Does my noble friend the Minister share my concern that HMRC estimates that the loss of VAT through evasion by foreign online supply companies is between £600 million and £900 million? However, despite having the powers to do so, HMRC has not frozen any funds, it has not blocked any listings and it has not seized one item of stock from warehouses where goods from overseas suppliers are stored awaiting dispatch the next day.

[Lord Bates]

My Lords, I congratulate my noble friend on his commitment and consistency in raising these very important issues which the Government recognise. That is why, for exactly the reasons he has outlined, we were the first country in the world to introduce joint and several liability for market sellers. We have issued more than 3,000 joint and several liability orders since they were introduced and the amount of tax revenue, which is the crucial point raised by my noble friend, is expected to increase to £1 billion over the review period leading up to 2023. However, more needs to be done.