TaxAdministrationNAO highlights e-tail loophole

NAO highlights e-tail loophole

A government report is set to expose abuse of the VAT system by e-tailers

Internet retailers such as Amazon have made use of a loophole in VAT rules
whereby single items imported from Jersey or Guernsey under £18 are exempt from
the sales tax.

The National Audit Office will publish a report tomorrow lifting the lid on
risks to tax revenue arising from e-commerce. ‘There has been substantial growth
in transactions conducted over the internet in recent years and on which VAT may
be due to HMRC. The study examines whether the department is responding
appropriately to the risks,’ the NAO said.

The Forum of Private Businesses, a lobby group for smaller retailers, has
complained that the offshore rules allowing goods of low value to be VAT exempt
when traded from places like Guernsey and Jersey, has damaged small businesses
and lost the government tens of millions of pounds in lost revenue.

The report covers ‘goods ordered online and delivered by mail/courier and
services delivered electronically to UK customers’, the NAO said.

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