Chinese eBay sellers with UK based stock

[epicj]

There is far more money being evaded by UK importers who sell on eBay and Amazon, than non UK sellers who are selling within the UK.

I would have agreed with this statement a couple of years ago, not so sure the difference is that great these days. The scale of VAT fraud being committed by these sellers now is pretty big and growing every day.

This is not fraud on the part of sellers outside of the EU.

So the Chinese sellers who ship containers of goods to UK distribution centres, and then sell these on eBay/Amazon and don't pay VAT, are not committing fraud? Yes or No?

 

[MOIC]

No.

Fraud is a deliberate deception.

You cannot accuse NETP's of fraud if new guidelines have been issued recently and they have just continued their trading practices and not deliberately prepared false accounts or provided false figures or information in a deceitful way, since these guidelines were introduced.

As it stands at the moment the new guidelines which were introduced this year for a NETP are relevant from the date the guidelines were issued.

Most NETP online sellers (not solely Chinese, whom you seem to be solely targeting) have been selling online for a number of years and have continued the same practices as they have used from day one, which was perfectly in line with guidelines issued.

I don't think it can be reasonably expected for a non English speaking person to understand completely the requirements of the new guidelines issued this year. (Read in its entirety)

There must be a procedure in place where it is explained to them that the new guidelines are to be adhered to. It may be the case that some have an agent, representative or are in the process of setting up a UK registered company.

This takes time and HMRC cannot be reasonably expected to enforce the new guidelines from day one, before NETP's have the chance to do one of the above.

However the remedies for HMRC are the same to make these companies aware of the guidelines as well as prosecuting them, should they feel they have committed any fraudulent actions.

I do agree that eBay and Amazon etc should notify any sellers of the new regulations, but to ask them to be responsible for collection at source is not reasonable, practicable or workable.

It is not as simple as you think and there are legal issues involved between different countries and cross border selling arrangements. eBay, Amazon and all global selling platforms cannot be expected to police VAT payments globally.

This is a totally different scenario whereby UK businesses, online and otherwise are defrauding the government of probably billions of £'s of revenue by deliberately under declaring import values as well as sales.

This is where the problem should be tackled, especially when enforcement is easy in the UK, rather than taking NETP's to court, which will not be practical nor cost effective.

It's normal for people to see things from their own personal standpoint, but sometimes you have to look at the bigger picture.

If the issue is to stop businesses, UK or otherwise, defrauding the UK government of revenue, then you are targeting the wrong section of global society.

If the issue is creating an even playing field for global online selling, then this is happening, but please take on board that global online selling is a relatively new form of selling and takes time for guidelines and legislation to be created, passed and enforced.

eBay, Amazon, and all online selling platforms are not VAT police.

They can only follow guidelines.

 

[epicj]

Firstly, I don't care whether they are Chinese or not, my biggest gripe at the moment is a EU based competitor committing VAT fraud and undercutting me, I'm not affected that much by NETP in my niche market.

This thread is about VAT fraud committed by foreign sellers not UK based importers, so please lets discuss this issue not try to deflect the argument away again.

The law is the law, they are not guidelines. I thought the NETP became law in December 2012, correct me if I'm wrong? I'm not sure what existed prior to that, maybe thresholds. Below is what I read from "VAT Notice 700/1", in black and white.

"Since 1 December 2012, the standard UK registration threshold has not been available to non-established taxable persons (NETPs). If you are an NETP, you must register for VAT if you make any taxable supplies in the UK."

In the old days, the overseas sellers, lets take Chinese just as an example, would trade on eBay/Amazon, they found it difficult to compete with British based business, issues like postage costs, import taxation, speed of delivery, all gave us UK based business some advantages. I have no problem with this competition, its doesn't break any laws.

So, what to do they do, they import the goods in bulk into the UK fulfilment centres, make the goods location UK, and bang goes lots of our advantages. They should be paying UK VAT as the goods are now based here, they are perfectly aware of this fact, or should be aware, the former is more likely, but they choose to ignore it.

Its a more recent phenomena as the ecommerce market has developed for them to base their goods in the UK. We both know perfectly well that these company's have no intention of paying VAT if they can get away it, and there lies the crux of the problem.

Its how to address this problem, that's were people like us, who have experience in these areas can maybe provide some answers?

It equally applies to UK and EU based sellers who exceed the thresholds, and commit VAT fraud, this bugs me even more.

Its eBay and Amazon primarily at the moment where this fraud goes on, so I think making either the selling platforms or the payment providers, like Paypal, deduct the VAT at source and pay to HMRC is not such a bad solution? Going to the source of the problem is normally the best solution.

 

[japancool]

I still don't understand how the goods arrive in the UK and reach Amazon's fulfilment centres without VAT being paid on them. Surely all goods entering the UK are subject to VAT and customs charges on arrival?

 

[epicj]

They do pay a little VAT & duty on import, but just like your competitor you mentioned, they under-declare the true value.

 

[japancool]

They do pay a little VAT & duty on import, but just like your competitor you mentioned, they under-declare the true value.

So that's really the main issue.

All the stuff about Amazon and ebay and so forth is really a sideshow, not the main issue. If the sellers paid the correct VAT when the goods arrived in the UK, they would have to put their prices up, and it would be a level playing field.

It's up to HMRC to ensure that the correct VAT and duty is being paid on ALL imports and the point of entry, both "private" and business.

In my sector, lots of people will buy the genuine goods from individual sellers based in Japan, China, Hong Kong or Korea, who will then mark then goods as "gifts" and declare the value under £18. Even if it takes a few extra days to arrive, people will happily wait the extra time, and it goes by the euphemism "will handle customs for you". As far as I'm concerned, it's the same issue.

 

[epicj]

No, there a much bigger competitive advantage if you don't pay VAT on the selling price, and much more VAT due.

 

[japancool]

No, there a much bigger competitive advantage if you don't pay VAT on the selling price, and much more VAT due.

Depends on the markup.

 

[epicj]

Yes, depending on the mark-up. The problem is how do you know the true value of the import from a foreign seller, whereas you know for sure the selling price.

 

[japancool]

They could just register a UK company to do exactly the same thing. The additional fees wouldn't be high compared to what they were making.

 

[epicj]

Sorry not quite sure what you mean? If they would register in the UK, pay import duties, sell the product and pay VAT as we do, then no problem.

 

[japancool]

No, they could register a UK company, under declare the VAT value on import, and keep the sales of that company under the VAT threshold.

HMRC still wouldn't be able to prove the value of the goods coming in.

 

[epicj]

Yes, they could do this, but they'd have to have tens if not hundreds of different ltd companies setup, some of these sellers turnover in the millions. Also, not so easy to hide this, associated companies and all that.

 

[MOIC]

Yes, depending on the mark-up. The problem is how do you know the true value of the import from a foreign seller, whereas you know for sure the selling price.

You are missing the point here.

The value of an Import is the same whether its a UK importer or not.

HMRC are not stupid, if they see an under declared item, they amend the price and possibly fine the importer for under declaration. This is an even playing field for all importers.

ALL imported products are subject to the FULL VAT and IMPORT DUTY payable, irrespective of whether you are a UK or non UK business.

ONLY HMRC can police VAT regulations.

This is not for ebay or Amazon, or any other global selling platform to do.

As an aside, if I was a non UK business looking to sell in the UK, I log on to the following HMRC sites regarding VAT:

https://www.gov.uk/vat-businesses/how-vat-works

https://www.gov.uk/vat-businesses/when-not-to-charge-vat

https://www.gov.uk/vat-what-to-do-if-youre-an-overseas-business-selling-goods-in-the-uk

The last link was published in July 2014.

Fraud is classed as a deliberate deception.

I don't think you can reasonably accuse someone of fraud in this situation. The onus is for HMRC to notify any offending parties and ensure they do what is correct. If after notifying the parties, they fail to adhere to any requirements, then the option is there for HMRC to prosecute.

It may be that a large number of non UK businesses maybe opting to employ a representative agent or are in the process of opening a UK company.

You do not know this.

I imagine that any business that has a large turnover and a successful business will play ball rather than risk not being able to trade.

Nobody knows what the profit margin is for any business and I suspect that any large business in China can legally trade and undercut any foreign business due to their huge advantage of buying and shipping much more cheaply, as well as the most important factor . . . . .They are prepared to work on a lower profit margin to get the business.

However much you scream, shout and cry foul, you cannot compete with Chinese volume sellers on price alone.

You must be able to provide a service(s) which puts you at an advantage by being in the UK and that UK buyers can appreciate.

You say you have a niche product. If it is manufactured generally in China, it will not stay a niche product for ever.

You must look at added services that you can promote where price is not the only factor or consideration that UK ebay buyers look at when deciding who to buy from.

I understand that the vast majority of ebay buyers are looking for the cheapest price possible, but this may change, as fair trade has manged to change people's stances when buying certain products.

Every business must adapt to competition, fair or otherwise.

Your assumption that VAT regulations, enforcement or fines will change the prices that Chinese businesses charge, will not happen.

I wish you good luck with your business.

 

[Pish_Pash]

In the eyes of the law, ignorance is no excuse, therefore if they are fulfilling here (the UK) whilst being based overseas & not registered for VAT (therefore breaking the rules), then I can't see how it can be viewed any other way than VAT fraud.

It's not really a defence to say "I'm Chinese & I don't understand your tax system" ...if they don't/can't understand our tax system, then it'd be better for them not fulfill from within our borders! A Brit based seller wouldn't be able to shrug his shoulders & say "sorry, I haven't handed any VAT to HMRC cos I didn't really understand the rules"

The thread is in danger of losing it's focus...there are many ways in which VAT can be ducked/minimized, but what we're saying here is that Amazon & other marketplaces are allowing overseas sellers to fulfill out of the UK ....such overseas sellers must be registered for VAT in such a situation. If Amazon & Ebay were forced to apply checks by the Govt (much like banks are required to with money laundering checks), they should not allow overseas sellers fulfilling from within the UK to sell unless they have a valid VAT number....even better, just have Amazon & Ebay deduct VAT at source....there can't be any avoiding VAT (or VAT fraud) then!

 

[epicj]

Well said Pish_Pash!!

We are going round in circles here, most of the points "office in china" raised have already been addressed and answered. Deliberate fraud or not, the law below is quite clear:
"Since 1 December 2012, the standard UK registration threshold has not been available to non-established taxable persons (NETPs). If you are an NETP, you must register for VAT if you make any taxable supplies in the UK."

You seem to think that these Chinese, and other nationalities, are making their best effort to abide by the rules, pay VAT where its due, etc, etc. I don't believe they are, in fact I think its quite the opposite, and most others who posted on this thread concur with that, hence the frustration we feel at this ongoing VAT fraud they get away with.

I suggested that eBay/Amazon collect VAT at source for NETP businesses trading on their platforms. Business already does this, we all collect VAT on behalf of the government, its just an extension of this.

This would remove any uncertainty about whether they are paying it or not, as Pish_Pash stated above.

 

[MOIC]

Well said Pish_Pash!!

We are going round in circles here, most of the points "office in china" raised have already been addressed and answered. Deliberate fraud or not, the law below is quite clear:
"Since 1 December 2012, the standard UK registration threshold has not been available to non-established taxable persons (NETPs). If you are an NETP, you must register for VAT if you make any taxable supplies in the UK."

You seem to think that these Chinese, and other nationalities, are making their best effort to abide by the rules, pay VAT where its due, etc, etc. I don't believe they are, in fact I think its quite the opposite, and most others who posted on this thread concur with that, hence the frustration we feel at this ongoing VAT fraud they get away with.

I suggested that eBay/Amazon collect VAT at source for NETP businesses trading on their platforms. Business already does this, we all collect VAT on behalf of the government, its just an extension of this.

This would remove any uncertainty about whether they are paying it or not, as Pish_Pash stated above.

You are wrong.

VAT cannot be deducted at source.

Your VAT number is personal to you and you are solely responsible for charging and receiving any tax due.

A 3rd party cannot be involved in deducting at source, or collecting on your behalf.

You are collecting VAT on YOUR sales and purchases.

I am not suggesting that non UK sellers are making "their best efforts" to abide by the rules. What I am saying is that there is a process available for HMRC to contact these sellers and prosecute if the situation demands it.

You are assuming that all non UK businesses, including Chinese, do not pay any VAT, have a VAT agent, or are in the process of opening a UK registered address or company.

You cannot hide your sales figures on eBay and Amazon and if there is any fraud being committed, then PayPal have a right to withhold funds and freeze the account.

eBay and Amazon can also close accounts if they see or feel that any fraud has been committed.

 

[MOIC]

In the eyes of the law, ignorance is no excuse, therefore if they are fulfilling here (the UK) whilst being based overseas & not registered for VAT (therefore breaking the rules), then I can't see how it can be viewed any other way than VAT fraud.

It's not really a defence to say "I'm Chinese & I don't understand your tax system" ...if they don't/can't understand our tax system, then it'd be better for them not fulfill from within our borders! A Brit based seller wouldn't be able to shrug his shoulders & say "sorry, I haven't handed any VAT to HMRC cos I didn't really understand the rules"

The thread is in danger of losing it's focus...there are many ways in which VAT can be ducked/minimized, but what we're saying here is that Amazon & other marketplaces are allowing overseas sellers to fulfill out of the UK ....such overseas sellers must be registered for VAT in such a situation. If Amazon & Ebay were forced to apply checks by the Govt (much like banks are required to with money laundering checks), they should not allow overseas sellers fulfilling from within the UK to sell unless they have a valid VAT number....even better, just have Amazon & Ebay deduct VAT at source....there can't be any avoiding VAT (or VAT fraud) then!

HMRC have the power to remedy any fraudulent situations, if they deem one has been committed.

All sales and history on these platforms are very transparent.

As mentioned above, PayPal can also freeze accounts if they see or have evidence of fraud being committed.

The problem is not non UK sellers selling on these platforms, but the creation fulfilment centres making it easy for a foreign business to sell in different countries.

You simply cannot know whether businesses pay the correct VAT, UK business, or non UK business.

I suspect that UK businesses selling on these platforms are avoiding paying VAT much more than non UK businesses.

They both affect you in the same way, if fraud has been committed.

 

[epicj]

"my office in china" I'm sorry, I don't want to appear rude, but your arguments are all over the place.

There is nothing to stop VAT being deducted at source, or any other tax for that matter, I do it with my employees, banks do it with tax on interest payments, so why not on-line selling platforms for NETP traders.

You contradict yourself, one minute you say its not the job of ebay, amazon and paypal to police their sites, then you say they should do it. They won't do it, I reported a clear case of VAT fraud to one of them 8 months ago, and the person is still trading. Now you start to blame the fulfilment centres, you seem to want to blame everybody except the actual seller themselves.

A UK person committing fraud risks prosecution, jail time, debt recovery, etc.

How do HMRC prosecute somebody in China, they'll just disappear, the money's gone and not a penny will be recovered! Better just to deduct it at source and problem solved, why can't you just admit this is a good solution?

 

[MOIC]

"my office in china" I'm sorry, I don't want to appear rude, but your arguments are all over the place.

There is nothing to stop VAT being deducted at source, or any other tax for that matter, I do it with my employees, banks do it with tax on interest payments, so why not on-line selling platforms for NETP traders.

You contradict yourself, one minute you say its not the job of ebay, amazon and paypal to police their sites, then you say they should do it. They won't do it, I reported a clear case of VAT fraud to one of them 8 months ago, and the person is still trading. Now you start to blame the fulfilment centres, you seem to want to blame everybody except the actual seller themselves.

A UK person committing fraud risks prosecution, jail time, debt recovery, etc.

How do HMRC prosecute somebody in China, they'll just disappear, the money's gone and not a penny will be recovered! Better just to deduct it at source and problem solved, why can't you just admit this is a good solution?

You are misunderstanding what I have written.

VAT collection, charging and returns are the sole responsibility of the VAT registered holder.

VAT cannot be deducted at source like tax can, please don't make this mistake.

They are 2 totally different taxes.

I said that eBay and Amazon have processes in place whereby they can stop an account trading if there is evidence that fraud has been committed.

The same with PayPal.

"Policing" VAT payments (deducting at source) is not something they have the remit to do.

I am suggesting that it is the creation of fulfilment centres that has affected the turnover of UK businesses.

HMRC have the power to prosecute whoever they feel is committing fraud. In order to sell on eBay and Amazon, as well as having a PayPal account, businesses cannot be anonymous.

Additionally, fulfilment centres should make any NETP sellers aware of their obligations. That's as far as they can go.

I am curious. How do you know which businesses are paying VAT on sales or not. UK or non UK?

 

[yolandy]

every one has the right to sell/buy on Ebay and Amazon unless they are legal.

 

[MOIC]

You're a bit late to the party!

 

[yolandy]

Actually, i'm an ebay seller based in China. Your discussion is interesting. We dont have a VAT while selling in UK, however, there is little profit today selling on Ebay. We pay much more compared to the local sellers.

 

[Pish_Pash]

Actually, i'm an ebay seller based in China. Your discussion is interesting. We dont have a VAT while selling in UK, however, there is little profit today selling on Ebay. We pay much more compared to the local sellers.

Are you fulfilling your Ebay orders from warehouse locations that are based within the UK, or are you sending all your orders direct from China to customers?

 

[yolandy]

Are you fulfilling your Ebay orders from warehouse locations that are based within the UK, or are you sending all your orders direct from China to customers?

Yeah, we fulfill 90% of the orders from our UK based ware house. it takes about 10 days if we send the products from China. So local warehouse is our NO.1 choice.

 

[Pish_Pash]

So, we have...

Actually, i'm an ebay seller based in China.

then..

we fulfill 90% of the orders from our UK based ware house..

yet...

We dont have a VAT while selling in UK.

....now just multiply by (hundreds of) thousands of similar overseas sellers & you can see why the thread was conceived!

 

[yolandy]

we also have factories in China, if you want to find a supplier(pet,baby products, auto parts), contact us. We are glad to be your overseas agent.

 

[14Steve14]

yet...


multiply by thousands up thousands of overseas sellers!

There is one admitting they are doing wrong. Hopefully now HMRC will act, but I doubt it very much.

 

[MOIC]

For every one non UK seller there are 2 UK sellers under declaring or not registering for VAT.

Which do you think HMRC should concentrate on first?

Take into account cost effectiveness and a positive outcome.

I fully understand the point of the thread, but remedies so far have fallen short of what is realistically possible.

My point, simply, that it is not solely Chinese sellers that are the problem. It's everyone selling on eBay and Amazon that may be avoiding paying VAT for one reason or another.

To target one and not the others may not be an appropriate solution.
I am sure many successful non UK businesses will comply, rather than not being able to trade.

If fraud is being committed by any seller, then eBay and Amazon have processes in place to stop their accounts as do PayPal.

 

[Pish_Pash]

For every one non UK seller there are 2 UK sellers under declaring or not registering for VAT.

Which do you think HMRC should concentrate on first?

the lowest hanging (& largest) fruit.

By requiring the marketplaces to deduct VAT at source *if* an overseas seller if fulfilling from the UK...it's a kerching moment for UK Treasury coffers.

 

[MOIC]

the lowest hanging (& largest) fruit.

By requiring the marketplaces to deduct VAT at source *if* an overseas seller if fulfilling from the UK...it's a kerching moment for UK Treasury coffers.

A much bigger kerching if they deduct all VAT at source, irrespective of who the seller is.

Kills two birds with one stone, so to speak.

 

[Pish_Pash]

A much bigger kerching if they deduct all VAT at source, irrespective of who the seller is.

You're still missing the fundamental issue - a UK based seller has a VAT 'turnover' threshold...you can't deduct VAT at source if a seller has not breached that threshold. Whereas an overseas seller fulfilling from within the UK, has no threshold & VAT could be deducted at source the moment he/she opted for 'fulfilled by Amazon.co.uk'.

As an aside (since you seem to always want to take this in a UK vs. overseas seller route), I'm quite up for the idea that once a UK seller breaches the VAT threshold, that Amazon automatically deduct the VAT from his/her sales at source too...it won't cost me anything but would make the playing field more level....I pay all VAT owing on my sales ...I'd much prefer it if everyone else did too!

 

[MOIC]

You're still missing the fundamental issue - a UK based seller has a VAT 'turnover' threshold...you can't deduct VAT at source if a seller has not breached that threshold. Whereas an overseas seller fulfilling from within the UK, has no threshold & VAT could be deducted at source the moment he/she opted for 'fulfilled by Amazon.co.uk'.

As an aside (since you seem to always want to take this in a UK vs. overseas seller route), I'm quite up for the idea that once a UK seller breaches the VAT threshold, that Amazon automatically deduct the VAT from his/her sales at source too...it won't cost me anything but would make the playing field more level....I pay all VAT owing on my sales ...I'd much prefer it if everyone else did too!

The fundamental issue of this thread was that Chinese sellers are avoiding paying VAT.

My point simply is that there is more VAT being avoided by UK sellers, which I presume also puts you at a disadvantage.

Yes, I agree that everybody should pay what is rightfully due and this should apply to all sellers in order to make it an even playing field.

Selling on these online platforms is both very transparent and the seller needs to have an authorised bank account as well as relevant contact details.

If it was possible to deduct VAT at source (which it is not) then presumably this can be done for all sellers trying to avoid VAT as well as other taxes due.

Unfortunately an even playing field means that everybody selling online must be 100% honest and this is asking too much from current society.

 

[Beachbum]

Good to see its on Tamebay now - http://tamebay.com/2014/11/daily-mirror-reports-chinese-vat-evading-sellers-on-ebay-uk.html

Looks like some of the sellers have put up VAT numbers - none of which match the companies which the eBay accounts are in.

Take a look at besdta_top - http://www.ebay.co.uk/itm/390620480382
Company name Anguo Electronics Co., Ltd. of Shenzhen - VAT number 151403845 is an official NETP VAT number registered to GUANGZHOU TAIGUFENG ELECTRONIC TECHNOLOGY CO LTD

So who exactly is running besdta_top & who is account for the VAT on the £1million a year sales on eBay.co.uk?

wedo-bestdeal - http://www.ebay.co.uk/itm/231282613425
VAT number GB152858000 is registered to MINFA ZHANG, UNIT E, S A 1 BUSINESS PARK, LANGDON ROAD, SWANSEA, SA1 8DB - The same address as GLOBAL STORAGE FULFILLMENT LTD - http://www.gsfesell.com/ - a fulfillment company with zero trading history.

So who exactly is MINFA ZHANG - I'm sure he will be able to account for the VAT on the £10million sales in the UK over the past 3 years made by wedo-bestdeal. And why is a Chinese Company using a VAT number registered to a UK individual? They should have an official NETP's VAT number registered with HMRC NETPs VAT team in Aberdeen...

Both besdta_top & wedo-bestdeal told me that they couldn't give me a VAT invoice as they didn't charge VAT on the items I purchased from them!!!

Hope they are both preparing for a big VAT bill...

 

[globby]

It is interesting that they have started to put up VAT numbers (whether they are correct or not).

This means that someone has tipped them off after this article.

Maybe they are reading this forum? Unlikely...
Maybe they are reading Tamebay? Unlikely...
Maybe they are reading the Daily Mirror? Unlikely...

More likely eBay called them up and told them to provide a VAT number after the article. Of course eBay doesn't care that the number is not correctly registered to the same business - its probably just to nullify the claim that they are trading without VAT numbers.

Now they're trading with an incorrect VAT number.... oh these Chinese traders - they must laugh at how easy our system is to abuse and eBay / Amazon facilitate this

 

[Beachbum]

I've been told that someone with higher powers than us mere mortals has asked eBay to provide VAT numbers of the people exposed in the Mirror article. And now the higher powers are asking eBay why the sellers have provided fraudulent VAT information and has asked eBay to make sure that the sellers in question provide VAT numbers registered in their companies names with HMRC NETP's VAT registration team in Aberdeen.

Slowly slowly catch a monkey....

 

[globby]

Good man! You should get a medal for this - or at least some commission for all the extra VAT HMRC might collect

Who would have thought it requires a disgruntled trader on a forum to raise this issue to the papers so HMRC stand up and pay attention to an abuse that has been going on REPORTED for years

But more importantly once these guys are put into line - what about all the other Chinese sellers - especially the mid size and smaller ones doing the same thing.

One step at a time I guess!

 

[Beachbum]

Thanks - I think there is a lot more to do. But at least its now slowing been taken seriously and we have a few individuals on the case that can help give it a bit more weight.

My next step is to set-up a petition and website addressing the issues similar to what http://www.amazonanonymous.org/ are doing

 

[TMGG]

If you look at the fulfillment company mentioned in the Mirror article it has links to China. I'm pretty sure they know about the article. Also UKBF ranks very high in google, so certainly a good chance they know about it.

These fulfillment centres have to have a connection here. They are more than likely actively contacting the companies out there to use their services and telling them what to do under the table. Of course I'm not saying the company mentioned in the article are doing this.

When the stuff turns up at these fulfillment centres and is undervalued, I presume the fulfilment centre is clearing the Import VAT. If so, surely they are connected in defrauding HMRC at that point?

Yes, many UK sellers are just as bad if not more so. The Chinese angle to it has just brought this to the fore.

Well done to Beachbum and others who have been working on this.

 

[epicj]

If it was possible to deduct VAT at source (which it is not)

VAT can be deducted at source, I'm not sure why you think it can't, show me where it says this? And if not, then another small amendment to the VAT 700 guidelines and it could be.

You asked how I knew whether the businesses are paying VAT on their sales?
- quite simple, from their feedback and their products retail prices you can calculate roughly their turnover, in this case a conservative estimate showed that even their monthly turnover alone was exceeding the annual registration threshold. They displayed no business details or VAT number.
- they sell some products we get from the same supplier, and the margins they were operating on were not sustainable for a business, I know I have the same cost base
- we made a test purchase, requested a VAT invoice and were told we are not registered

Not difficult to work out, and clearly VAT fraud.