VAT evasion still happening on eBay

[lupo-store]

We were one of the original campaigners against online VAT evasion. In 2021 when the law was changed to bring in VAT taken at checkout, we thought that everything was solved.

We were wrong.

it turns out that at the same time the UK government made a crucial mistake. They introduced postponed VAT accounting for imports, thus allowing Chinese companies to import under one company and that company would not pay any of the import tax and fold. By the time it folded it would have sold on the stock to proxy companies who were selling on eBay and Amazon.for imports, thus allowing Chinese companies to import under one company and that company would not pay any of the import tax and fold. By the time it folded it would have sold on the stock to proxy companies who were selling on eBay and Amazon.

crucially these companies were normal UK companies that would have Chinese nationals as the director. They would operate underneath the threshold for VAT registration and stop before they had to register.crucially these companies were normal UK companies that would have Chinese nationals as the director. They would operate underneath the threshold for VAT registration and stop before they had to register.

new proxy companies were created when nearing the threshold. All of this was done to gain financial advantage over UK companies paying import tax and VAT and had VAT levied on sales.new proxy companies were created when nearing the threshold. All of this was done to gain financial advantage over UK companies paying import tax and VAT and had VAT levied on sales.

A few days ago we got news that the U.K. government and National Crime Agency had started a crackdown on this:

11,500 companies have just been struck off. Some were in company formation ‘farms’

theres loads of news link but I am unable to show the link here. Some of these companies are the ones trading on eBay and they need to be removed by the platform 

[typo_lee]

I have also noticed this week a competitor running two separate limited companies however same address apart from one office is on floor 1 of the building and the other on floor 2 selling the same products on eBay. This is clearly to avoid VAT and keep below the threshold for each business. 

[lupo-store]

Firstly the Chinese took over private accounts.

now they are just using these seemingly legit proxy U.K. companies.

i have messaged trust and safety to say if any of these companies which have been struck off the register are still trading on eBay then eBay is breaking the law and jointly and severable liable for the debt.

They need to clean house and fast.

companies house are bringing in very good verification now for new companies and all existing companies will have to go through this by the end of the year.

[typo_lee]

I checked one of the limited companies and it has a huge negative net worth so I’m guessing all is not good so you might be right in saying some of the companies are bust but still trading on ebay

[custom-giftsuk]

I know of at least 1 seller, who has, at last check - 15 different accounts.
4 different variations of the same name, 5 different addresses and they just mix and match.
Several of these accounts have hundreds of thousands of feedback each with millions of items sold.
Same VAT number.
If eBay take one down, they pop up with another one. 
They all sell the same items, thousands and thousands of duplicates, even in the same account.

[tribalgiftsuk]

Ive seen at least 100 private accounts selling the same stuff as the Chinese sellers in China are selling. All have 100's of listings so are probably selling as proxies of those companies and obviously not paying any VAT or selling fees. 

Some change the photo's to look more like private sellers whilst others keep the same stock photo's as the sellers in China. Its a huge racket i feel.

No offence to the genuine Chinese sellers that are registered as businesses in China and are legitimate and i myself buy from. 

[lupo-store]

The Treasury are looking at VAT taken on ALL online marketplace sales at source.  Overseas, Domestic and private.  

Nowhere to run then.

Also removing de minimis import threshold to stop Temu.  I have been involved in Teams meetings with senior Treasury personnel.

[the-nutwood-collection]

If the VAT finds out, they'll be toast. 

Associated entities created to facilitate VAT evasion is a definite no-no.  They'll be in VAT reclaim plus penalty land.

[gemini-project]

I'm not surprised by this, there are still plenty of businesses trading on private accounts, i came across a business seller the other day with fake details which i reported but of course one of the kind people at ebay couldn't find anything wrong.