Online marketplaces including Amazon and eBay cost the UK up to £1.5bn last year due to VAT fraud or error, says government auditor.
According to a report by the National Audit Office (NAO), overseas sellers on online marketplaces failing to charge the appropriate level of tax on goods sold to British customers resulted in a loss of up to £1.5bn in VAT by the government last year.
According to the report the majority of implicated sellers were based in China and were failing to charge the standard 20% VAT rate applied to retailers outside the EU and pay the cost to the HMRC.
NAO chair Meg Hillier said: “This is a double whammy for taxpayers.
“Overseas sellers who avoid VAT undercut the prices charged by small, law-abiding British businesses, hitting British jobs.”
The report found that online sales accounted for £14.5% of all UK retail sales last year and just over half of these purchases were made through non-store sales, mainly comprising of online marketplaces.
A statement from Ebay said: “We will continue to work closely with HMRC to ensure that all sellers on our platform comply with the law,” while Amazon said it will “promptly remove any seller that they [the HMRC] inform us is not VAT compliant.”