Seller committing tax fraud. EBay not removing seller

[lupo-store]

I have a competitor in one of the markets I sell who sells just below the VAT threshold every year. I believe they have sold maybe £300,000 over the last four years.

It was alerted to me that whilst they are trading on eBay, they are filing their status as dormant on companies house. This means that they are not trading.whilst they are trading on eBay, they are filing their status as dormant on companies house. This means that they are not trading.

I have reported the matter to HMRC, the insolvency service, and companies house.

companies house responded to say that they are seeking rectification from the company and failure would lead to legal ramifications (under the UK law knowingly filing dormant accounts leads to up to 2 years in prison)companies house responded to say that they are seeking rectification from the company and failure would lead to legal ramifications (under the UK law knowingly filing dormant accounts leads to up to 2 years in prison).

These emails from companies house have been forwarded to Ebay concierge, who in turn at the start of September forwarded these to trust and safety.  the company was not showing their full company name and company number on eBay but now it appears that Ebay have forced them to show this.The company was not showing their full company name and company number on eBay but now it appears that Ebay have forced them to show this.
it is now over one month since I have reported this seller yet they are still selling on eBay whilst filing dormant accounts.it is now over one month since I have reported this seller yet they are still selling on eBay whilst filing dormant accounts .

This is a clear cut case of tax evasion and breach of Ebay user agreement. Furthermore, there is a connected account where a test purchase was made from so they seem to be dividing their sales.clear cut case of tax evasion and breach of Ebay user agreement. Furthermore, there is a connected account where a test purchase was made from so they seem to be dividing their sales.

under joint and several liability laws Ebay must remove sellers who are committing tax fraud, however, even though I have provided proof Ebay are not acting. It appears that Ebay will only act when either Hmrc or company house will contact them, which is really frustrating.

[tressygirl]

You have done everything you can and alerted all relevant parties to your findings.

However,  in your last paragraph you wrote ....

"   however, even though I have provided proof Ebay are not acting. It appears that Ebay will only act when either Hmrc or company house will contact them, which is really frustrating.  "

...and therein lies the next step,  it's up to HMRC or the company  house,  to now take action.

Frustrating for you I agree,  but the cogwheels in action,  can work slowly here.

@lupo-store 

[papso22]

Where is your evidence of tax evasion?

[lupo-store]

If a company files dormant accounts with companies house it means they are not trading.

if the same company has sold £300k in the same period on eBay that’s clearly not dormant. 

[lupo-store]

Yes it’s very frustrating to see how slow and inept these government agencies are

[notstopbuying]

Perhaps they are not using that particular limited company or perhaps they are filling privately. 

[tressygirl]

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@lupo-store wrote:

Yes it’s very frustrating to see how slow and inept these government agencies are

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Seeing other responses here and questions asked, it seems to me this is not such a clear cut, quick decision to make by the powers that be,  could take some time, investigating and solving.

@lupo-store 

[lupo-store]

They are 100% using the same company number on eBay as the one they are filing multiple dormant accounts for.

What “dormant” means: A company is only dormant for Companies House if it’s had no significant accounting transactions in the financial year (filing fees, late penalties and initial share capital don’t count). If it’s actually trading (selling goods/services, earning income, paying suppliers, using a bank account, etc.), it is not dormant.

Why filing dormant accounts when trading is serious: Submitting dormant accounts (or ticking “dormant”) while knowingly trading can amount to making a false statement to the Registrar, which is a criminal offence under the Companies Act 2006 (s.1112 / 1112A). Offences can lead to fines and, in serious cases, imprisonment or director consequences. Companies House now has stronger powers to query, reject and remove false filings under the Economic Crime and Corporate Transparency Act 2023 (ECCTA).

Tax angle: If the company’s trading but filing as dormant, HMRC can still pursue Corporation Tax, VAT and PAYE liabilities (plus penalties/interest). (HMRC’s treatment is separate from Companies House status.)

What you can do (practical steps):

Report to Companies House (filings that are false/misleading). Use the official “Complain about a limited company” route and provide evidence of trading (website/marketplace listings, invoices, delivery labels, bank/payment screenshots, ads).

Flag to HMRC if you suspect tax evasion (e.g., trading with no CT/VAT reporting). Use HMRC’s fraud hotline form.

If platforms are involved (eBay/Amazon): notify them that the seller appears to be actively trading while filing dormant accounts and may be non-compliant with UK company/tax law. Marketplaces can face joint and several liability for VAT in certain cases and therefore take compliance reports seriously. (You’re not alleging VAT evasion unless you have evidence—just set out facts neutrally.)

[papso22]

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@lupo-store wrote:

If a company files dormant accounts with companies house it means they are not trading.

if the same company has sold £300k in the same period on eBay that’s clearly not dormant. 

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Sorry but that is not evidence of tax evasion.  Tax is paid on corporation tax returns, not company accounts.

But as you have alerted HMRC they will look into it.

[lupo-store]

Ok we stand corrected on that point, however, we find it hard to understand why someone would file dormant accounts and full correct corp tax returns.  It would not make sense:

Dormant accounts at Companies House – These are statutory filings to confirm a company has had no significant accounting transactions. It doesn’t prove anything about tax paid, it just shows what’s been declared publicly. Filing dormant accounts while actively trading is a false filing under the Companies Act, but not automatically “tax evasion.”

Corporation Tax returns to HMRC – These are separate from Companies House accounts. A company can file dormant accounts at Companies House but still file a full Corporation Tax return to HMRC (and pay the correct tax). Conversely, if they’ve also not filed CT600s or declared trading profits to HMRC, then that could amount to tax evasion.

Your report to HMRC – What HMRC will do is cross-check the trading activity (e.g. £300k turnover on eBay/PayPal/Amazon/merchant accounts) against what the company has filed with them. If there’s a mismatch (e.g. dormant filings at Companies House and no CT600 submitted to HMRC), then they may investigate for tax fraud.

👉 So the “dormant accounts” alone = Companies Act offence (false filing).
👉 Not declaring profits to HMRC = potential tax evasion.

[notstopbuying]

If they have turned over more than 90k in a rolling 365 day period, have they registered for VAT? Do they show a VAT number on ebay or on their invoices? Have you made a test purchase? 

[lupo-store]

They are not registered for VAT, however, a test to purchase was made from a different seller who is selling the same items.

Seller 1:  Company is registered in Herefordshire but Company director lives in Northamptonshire.  Not VAT registered and filing dormant accounts

Seller 2:  VAT registered in Somerset. Item location shows Slough. Test purchase was made and dispatched from the exact address of the company director for seller 1. 

Looks like a separation of one company in order to mitigate tax [allegedly]

[simplyessential_uk]

it is now over one month since I have reported this seller yet they are still selling on eBay whilst filing dormant accounts.it is now over one month since I have reported this seller yet they are still selling on eBay whilst filing dormant accounts .

I think , just like many Private accounts that are not registered as businesses, Ebay takes the view that it isnt up to them to police peoples tax affairs.  They are only required under the new law to record earnings on their platform from Jan 2024 onwards, so in Jan 2025 HMRC will have been notified of their earning and requested to pay the tax if they were not confirming - if they turned over the £90k VAT then this would have been clear.  Im afraid you are unlikely to get any more from Ebay than this and the rest is upto HMRC.  As its only been a month, I suspect alot of information gathering is required but also no doubt many many people are reported to HMRC and there may be a back log so may take months. As frustrating as it can feel there is nothing else you can do.

[lupo-store]

You are totally right and actually I do have some sympathy with eBay because the rest is down to HMRC, who are about as affective as a chocolate fireguard.

Just last week I received a letter from the taxation Minister and he had been mis-advised by them.  I am pushing for the Chancellor to create an online marketplace tax evasion team within HMRC

[simplyessential_uk]

There would certainly be lots of people reported if that was the case - In theory, the online reporting that Platforms are supposed to now send to HMRC, should in effect, stop "side hustles" and tax evasion but I bet that is the first step of many - getting a letter sent and making a tax evasion case must be quite a lengthy process as Im sure their intent to defraud HMRC needs to be proven and time given to pay/rectify, also "online marketplace tax evasion team within HMRC" would be costly so they would need to catch more people to make it pay.

[lupo-store]

I think the problem we encounter is the more complicated tax evasion buy more sophisticated Business sellers, mostly Chinese