Electronic Commerce: VAT

HM Treasury written question – answered on 17th November 2015.

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Photo of Lord Lucas Lord Lucas Conservative

To ask Her Majesty’s Government, in the light of recent reports about VAT fraud by online traders operating from abroad, what is their estimate of the impact of such tax evasion on (1) the public purse, and (2) UK businesses.

Photo of Lord O'Neill of Gatley Lord O'Neill of Gatley The Commercial Secretary to the Treasury

Any UK VAT losses arising from online traders operating from abroad are already included within the published UK Tax Gap.

The estimate of the VAT Gap published in “Measuring Tax Gaps 2015 edition” on 22 October 2015 is £13.1 billion. Overall, the UK Tax Gap was 6.4 per cent in 2013-14,down from 6.6 per cent in 2012-13. As part of that, the VAT Gap is calculated as 11.1 per cent in 2013-14, a reduction from 11.9 per cent in 2012-13.

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