Amazon and eBay amongst on-line corporations included in tax loophole clampdown in Budget
Reports say Chancellor John Healey will crack down on mainly overseas sellers that abuse lax rules and enforcement to avoid paying VAT on sales
Tackling foreign firms that register as UK retailers to avoid VAT is among reported measures in John Healey’s Budget(Image: Gary Roberts/SOPA Images/Shutterstock)
Online giants such as Amazon and eBay will be forced to collect tax from all foreign sellers for the first time under plans to be announced in the Budget, it is claimed.
Reports say Chancellor John Healey will close a loophole by cracking down on mainly overseas sellers that abuse lax rules and enforcement to avoid paying VAT on sales. According to the Times, Mr Healey will say that the move will raise £1billion for the Treasury, which will be used to cut business rates for high street shops.
A growing number of online retailers have marketplaces that allow other firms to use their profile and know-how to advertise products and sell to consumers.
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These marketplaces have been required to collect VAT from overseas sellers since 2021. However, some sellers have tried to sidestep the rules by registering as UK companies.
Under the shake-up, websites would be forced to collect VAT from other retailers where they have a turnover of more than £90,000 a year, regardless of where they are based.
Amazon, which already collects VAT from foreign sellers, said: “Closing this loophole will raise significant revenue for the exchequer and simplify compliance for HMRC and legitimate sellers.”
It came amid separate reports that Mr Healey will say that any giveaways in the Budget will be paid for by tax hikes and spending cuts, rather than additional borrowing.
There is mounting speculation that the Chancellor will announce cost of living support, especially with energy bills ahead of an expected spike in January.
PM Andy Burnham has already announced the temporary removal of VAT from electricity bills, saving households an average £45 a year. Other measures to give households “breathing space” include a £2 cap on bus fares from January.
According to the Financial Times, Mr Healey will use a “scorecard” to ensure that any discretionary spending by the end of this parliament will be fully funded.
The Chancellor is keen to ensure the Budget is seen as what economists say must be “credible” in the eye of financial markets, for fear of driving the UK’s public borrowing costs.
Mr Burnham met bosses at a Downing Street event earlier this week in which he reportedly ensured them he wanted to run “the most pro-business country in the world“. Business is smarting after past Budgets under former Chancellor Rachel Reeves which have included a jump in employers’ national insurance contributions.
