I am officially angry about this… I’ve just been reading this article here which appeared on the BBC news website earlier this week detailing how Amazon and eBay may find themselves ‘liable’ if they continue to ignore some sellers on their sites who are committing VAT fraud. The Guardian also ran an article here and Radio 4 also picked up on this. You can listen here These articles all refer to traders who sell online but are not registered for VAT when they should be and those who use fake VAT numbers to register or who use the same VAT number for multiple seller ID’s. Now I’m no tax expert and it’s an extremely complex subject, but I do agree, that as the article implies, some of the worst offenders are Chinese sellers. Large numbers of Chinese sellers are listing products on the UK eBay site and are in fact shipping from UK based fulfilment centres or using Amazon FBA, rather than shipping directly from China. What this means is that these sellers are avoiding paying VAT as they are not registered in the UK. All non-EU based sellers are required to charge VAT, but it just isn’t happening so they, of course, have a major advantage – VAT avoidance. Let’s take eBay first for example. eBay UK has millions of sellers registered and many of those are fledgling or small businesses consisting of people like you and I working for ourselves to make a decent living. Once our turnover reaches the threshold whereby we must register for VAT (currently £82,000 per annum) we do so, or risk the wrath of HMRC. But Chinese sellers who clearly have turnovers in excess of £82,000 are avoiding paying VAT because they are not registered. What’s even more frustrating is that there is no actual threshold for foreign sellers outside the EU to register for VAT, so sellers from outside the EU MUST register for VAT and charge VAT even on a product as cheap as an iPhone case sold at 1p for example! But they are not. So, now more and more Chinese sellers are listing extremely cheap products on eBay that are being dispatched directly from the UK and this means it’s becoming harder for UK sellers to compete with their prices in some niches. Then there’s Amazon. Plenty of Chinese sellers are using the FBA (Fulfilment By Amazon) service which again means that orders are being shipped from within the UK. However, it’s clear once again that those sellers are not registered for, nor paying VAT. Unsurprisingly, eBay and Amazon declined to be interviewed and are both quoted in these articles as saying that they should not be ‘liable’ and that ‘reminding’ sellers that they must comply with their legal obligations is enough. Well, I disagree. Clearly, both Amazon and eBay are aware that the stock from these sellers is in the UK (particularly Amazon if Chinese traders are using FBA) and so they should know that these traders are not registered for VAT. I’ve experienced this myself when trying to get a VAT invoice from a Chinese seller who simply can’t provide one because ‘VAT hasn’t been charged’. If VAT hasn’t been charged then they are obviously not VAT registered despite their sales and turnover – and this is wrong. So, on this basis surely eBay and Amazon are knowingly helping non-EU sellers avoid VAT, so therefore why shouldn’t they be liable? At present, there is absolutely no incentive for eBay and Amazon to disallow traders from outside the EU selling on their sites if they are not VAT registered. But here’s the thing. eBay and Amazon actually want these sellers to continue trading from their sites because ultimately it means more revenue for eBay and Amazon. If they were made liable, then that would surely be an incentive to ensure that all is fair on the trading floor. As a seller, it is incredibly frustrating to see Chinese sellers dominating some niches with cheap products and claiming to be ‘UK companies’ when in reality they are based in China and only dispatching from the UK. I’ve read further on this and opinions vary with some commentators saying that we shouldn’t worry about it and simply leave it to HMRC to sort out…ok but they are obviously not addressing the issue as it’s still going on. There is also the argument that as a buyer you can pick up cheap goods from Chinese sellers this way. Yes, of course, but for us sellers competing with other traders who are avoiding VAT and so listing at stupidly low prices, it’s detrimental to our own legitimate businesses. So, what’s the solution? Ultimately HMRC has got to get involved as this is their department. In my opinion, they have a duty to look into this further and surely they would welcome all those extra taxes being paid? eBay and Amazon – well they should be made to take some responsibility too, stop being greedy and start looking after their UK clients on their UK site rather than turning a blind eye. And what can you and I do? Continue to fight that’s what. eBay UK and Amazon UK are our venues. Yes, Chinese sellers will probably carry on selling cheap, avoiding tax and undercutting us. When a Chinese seller is dispatching from the UK it’s clear that it’s harder to ignore them because they already have a 20% price advantage from the get-go, but let’s not be despondent. We do still have several advantages. My advice has always been to basically ignore Chinese sellers prices when researching products with the potential to resell – and I absolutely stand by that. You and I can still compete with the Chinese sellers who are still dispatching from China simply because we can give faster dispatch and delivery times, better customer service and potentially a higher quality product not to mention cutting out the worry for customers of incurring import duty charges. As for those traders dispatching from the UK, well they are harder to crack and until HMRC get involved I fear we will have to just sit it out as far as selling on eBay and Amazon are concerned. And of course, there are other options. Create your own webstore – it’s not particularly difficult using an eCommerce solution such as Shopify or EKMPowershop. Yes, you’ll need to concentrate on great marketing to ensure you get traffic to your store, but it’s easy to get a customer to buy once they reach your webstore and there will be no distractions or competition close by. So, whilst I am angry with eBay and Amazon for side-stepping their responsibilities, passing the buck, and not supporting their UK clients, I certainly won’t let them, or fraudulent Chinese sellers beat me. And you shouldn’t either.