VAT: Evasion

Lord Lucas Excerpts

Monday 20th November 2017 Lords Chamber

Asked by

[Lord Lucas]

To ask Her Majesty’s Government what progress Her Majesty’s Revenue and Customs have made in closing down VAT evasion by overseas sellers trading in the United Kingdom through online marketplaces; and what remains to be done.

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

My Lords, the Government recognise that this issue has a significant impact in preventing a level playing field for legitimate UK businesses. That is why the Government took decisive action at Budget 2016 to tackle VAT non-compliance by overseas traders who sell goods to UK customers via online marketplaces.

[Lord Lucas (Con)]

My Lords, that is a very welcome reply—albeit that it has been a very long time coming. For several years now, the Inland Revenue has known that it is losing £1.5 billion in VAT, and that we are losing £6 billion a year in economic activity, but has done nothing, so I am delighted to hear that things are changing. Will my noble friend please make sure that the Chancellor emphasises to HMRC that fairness is important, and that having teams of heavies go round to UK taxpayers and then do nothing about enormous abuse by Amazon and its serfs really gets people’s goats, does not make people love the taxation system and does not make them like the Government, either?

[Lord Bates]

First, I pay tribute to my noble friend for being a consistent campaigner on this issue, which has brought about significant change. We introduced the change where there is joint and several liability. The problem here is that non-EU importers are bringing in goods to the UK at wholesale prices, storing them here, selling them on at retail prices and not paying the VAT, thereby undercutting small businesses. We responded to that by introducing joint and several liability for online providers. That has meant that the number of non-EU traders registered in the UK has gone up from 700 to 17,500 just over the past two years—so we believe that we are making progress, but there is a lot more to do and we have further ideas in that area.