Pandemic pushes HMRC to scale back online seller checks

HMRC has reportedly reduced checks on sellers using online platforms like Amazon and Ebay, even though there have been complaints from High Street retailers and concerns have been raised about potential tax evasion.

A freedom of information (FOI) request made by The Financial Times (FT), found that between April and December 2020, the tax authority had sent only 80 data requests to online platforms about sellers, a significant drop from the 2684 requests put in during the previous year.

The National Audit Office revealed that VAT evasion by international sellers on platforms like Amazon and Ebay was estimated by HMRC to cost between £1 billion and £1.5 billion in the year 2015-2016.

According to the newspaper, HMRC said that the decrease in data requests was due to resource reallocation to manage coronavirus support measures, including the furlough scheme.

“The low numbers of requests for data in the 2020-21 tax year reflects the fact that the Covid-19 pandemic has meant that this has been a difficult time for businesses, and we recognise the impact of our data requests and the extra burden these would cause at this time,” the tax authority said in its FOI response.

The FT said that the reduction in resources for online seller checks had raised concerns about the authority’s ability to enforce new rules introduced last month.

The law now requires overseas sellers to register for VAT in the UK when selling items under £135 to British consumers.

But HMRC said it has “continued to prioritise tackling fraud and criminal attacks throughout the pandemic, as well as supporting our customers”.

The government body added: “HMRC regularly asks for data from third parties which is used to identify areas where we need to educate customers on their obligations. We also use the data to identify non-compliance and support customers to get their tax affairs up to date.”

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