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BBC Panorama: The fraud costing the UK £1bn a year

From BBC - November 27, 2017

A BBC Panorama team has smuggled goods into Britain and then sold them on eBay and Amazon to highlight a fraud costing the country a billion pounds a year.

The undercover team imported goods from China and did not pay VAT at the border.

Amazon and eBay told the BBC that they take VAT fraud seriously and they work closely with HMRC to stop it happening.

The fraud costs the UK more than 1bn a year and puts UK firms out of business because they cannot compete with sellers who have evaded VAT.

British traders Roni and Neven Juretic sell phone and tablet covers online, but their sales fell by 60 per cent because they were undercut by fraudulent sellers.

Roni Juretic said: "If they are selling it 20% cheaper because they are not charging VAT, then it's impossible for us to reach those prices. That's why a lot of the other UK competitors have dropped away."

Importers should pay VAT when they bring goods into the UK, and charge it when they sell them to customers. But evidence suggests thousands of traders do not do either.

Panorama set up a British company to show how the fraud works and imported bluetooth speakers and mobile phone cases from China.

The company evaded more than 500 of import VAT and was not challenged by the tax authorities. And Amazon and Ebay profited by charging fees for the sales of the illegal goods.

Meg Hillier, the chair of the parliamentary spending watchdog, told Panorama: "It's pretty shocking that you can do it so easily and so openly, so blatantly. We need to make sure that there are systems in place to stop that happening."

HMRC says it has new powers and is tackling the problem.

Tax Commissioner Jim Harra told Panorama: "It's something that you should not have done. But do I believe it is completely impossible to smuggle goods into the UK without paying duties if you are determined to do so? Of course, it's not."

The BBC has now repaid the evaded tax to HMRC.

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