VAT: Tax Evasion

Treasury written question – answered on 6th August 2019.

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Photo of Lord Clement-Jones Lord Clement-Jones Liberal Democrat Lords Spokesperson (Digital)

To ask Her Majesty's Government what assessment they have made of the amount lost to the Exchequer due to VAT fraud perpetrated by online traders based outside the EU; and what estimate they have made of the proportion of that fraud originating in China.

Photo of Lord Young of Cookham Lord Young of Cookham Lord in Waiting (HM Household) (Whip), Lords Spokesperson (Cabinet Office)

The information requested is not held. HM Revenue & Customs (HMRC) estimate the tax gap, which encompasses fraud for VAT, excise duties and customs duty. However, it is not possible to produce these estimates for online traders based outside the EU, and for fraud originating in China. Tax gaps for VAT, excise duties and other taxes overall are provided in HMRC’s publication ‘Measuring Tax Gaps’.

HMRC estimate that the tax loss from VAT fraud and error on online marketplaces was between £1 billion and £1.5 billion in 2016/17. The department estimates that overseas sellers contributed to approximately 60% of the VAT loss.

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