Amazon and eBay have been accused of profiting from foreign firms trading on its marketplace platform and failing to charge VAT on UK sales, a Public Accounts Committee report has found.
The report estimated that £1.5bn of taxpayers money has been lost from foreign firms increasingly holding stock in the warehouses of Amazon and eBay to provide for next day delivery and failing to charge 20% VAT on the products, as UK law demands.
Not charging the VAT also allows the companies outside the UK to undercut UK sellers who comply with the law.
Meg Hillier, the committee’s chair, said: “Online marketplaces tell us they are committed to removing ‘bad actors’, yet that sentiment rings hollow when those same marketplaces continue to profit from the actions of rogue traders.”
The report also criticised HMRC for being “too cautious” in pursuing the “fraudsters”.
“HMRC has been slow to get to grips with the problem and is not yet doing enough to tackle it,” the report said.
MPS have recommended that the UK's tax agency, HMRC, should set up an agreement with online marketplaces by March next year to tackle the issue. They have also said Amazon and eBay should require non-EU sellers - which dispatch goods already in the UK - to provide a valid VAT number and that HMRC should "inject more urgency" by making more extensive use of its existing powers.
An Amazon spokesman said the company was reviewing the committee’s recommendations. “We offer extensive information, training and tools to assist sellers in their VAT obligations, and we work closely with HMRC on this matter,” he said.
Meanwhile an eBay spokesman said the company had been working with HMRC to continue to ensure the site was the best possible place to do business.