Amazon and eBay criticised by MPs for 'turning blind eye' to tax fraud on sites
Online retailers Amazon and eBay have been accused of profiting from a multibillion-pound tax fraud and "turning a blind eye" to the problem.
MPs grilled senior representatives of the companies at a meeting of Parliament's Public Accounts Committee (PAC) on Wednesday, and criticised them for not doing enough to tackle the problem.
HM Revenue and Customs (HMRC) estimates that taxpayers have lost £1.5 billion from overseas sellers illegally selling goods into the UK without paying VAT.
As a result, many small British businesses are struggling to survive as prices are undercut, MPs said.
Labour MP Caroline Flint repeatedly challenged Joe Billante, an eBay vice-president, and Steve Dishman, a vice-president at Amazon, to admit they were profiting from the activity.
She said: "You are profiting from the evasion of tax by these overseas sellers. Is it not a fact that if you have overseas sellers using your marketplace, and you are taking money from them for every product sold on your online marketplace, whether intentionally or not, the system is creating you as profiteers from the evasion of tax?"
She added: "We are talking about billions of pounds of VAT which is being lost to the HMRC and to the UK.
"It is putting out of business legitimate businesses that are playing by the rules."
Mr Dishman replied: "We want all the bad actors off our platform... We are focused on having a level playing field so everyone can compete equally."
Mr Billante said eBay "does not want any of these sellers" using its platform, and that the firm will "take action" when fraud is discovered.
Some foreign sellers now export their goods to the UK and store them in "fulfilment houses" before they are sold through online marketplaces.
All traders outside the EU who sell goods online to people in the UK are required to charge VAT if their goods are already in the UK at the point of sale.
Amazon and eBay say it is up to the sellers to declare the VAT from their sales.
Conservative MP Nigel Mills accused both companies of "turning a blind eye" to fraud.
He said: "It's a lot of money the taxpayer is losing here. Haven't both your companies just been turning a blind eye to this for a long time?"
Both companies said they now required sellers on their sites to prove that they were registered for VAT.
HMRC also accused Amazon of not providing "complete transparency" on the overseas sellers using their site.
Jon Thompson, chief executive and permanent secretary of HMRC, told the committee: "I think there's a risk that the committee could fall into assuming that there is some transparency between the two organisations.
"It is true to say that online marketplaces can access our systems to validate VAT numbers but I do not think you should not fall into assuming that we have transparency back the other way."
Mr Dishman said the company would co-operate with any attempts to strengthen the law and said measures were being put in place to make it easier for sellers on Amazon to declare VAT and to educate foreign companies on the law.
The PAC will now produce a report on the issue in the coming months.