eBay Scammed Us/HMRC?

[4x4accessories]

We’re a UK-registered business with a UK VAT number, though we’re partially owned by a Swedish investment company. We sell goods within the UK, all subject to 20% VAT.

eBay recently changed how they handle VAT on our account for UK orders - they now collect VAT from the customer, keep the funds, and deduct it from each sale. They claim to pass this directly to HMRC against our VAT account.

HMRC have now issued us a penalty and a fine for tens of thousands due to a shortfall, even though eBay say they’re handling VAT on our behalf.

So basically, eBay are taking VAT from each order and not passing it on, leaving us liable and defrauding HMRC in the process.

We’ve spoken to around 10 different people at eBay, and not one seems to have a clue what’s going on. At this point, legal action feels like the only route, unless someone here has dealt with something similar. Thought I’d try the forum before involving our legal team.

We’ve just paid HMRC tens of thousands of pounds to cover the shortfall, money that eBay deducted from our orders as VAT but failed to pass on. eBay now owe us a substantial amount for effectively defrauding HMRC and leaving us to deal with the consequences.

[cobwebcottage]

I would say that your professional legal team are best equipped to deal with this and not the forum.

Best of luck.

[4_bathrooms]

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@4x4accessories wrote:

We’re a UK-registered business with a UK VAT number, though we’re partially owned by a Swedish investment company. We sell goods within the UK, all subject to 20% VAT.

eBay recently changed how they handle VAT on our account for UK orders - they now collect VAT from the customer, keep the funds, and deduct it from each sale. They claim to pass this directly to HMRC against our VAT account.

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As your company has a non-UK established owner eBay were required to charge and remit VAT at the point of sale - this is correct. However, the way it works is your company makes a zero-rated supply to eBay - how have you (or your accountants) been accounting for your eBay sales in the company's VAT return? Were the documents supplied by eBay passed on to HMRC?

You'll likely need to inform HMRC about your company's ownership and the fact your sales were/are conducted through an online marketplace (eBay) - it seems HMRC are not aware of that fact. It doesn't look to me as though eBay have done anything wrong - I suspect it was the information supplied in your company's VAT return that was the issue.