It seems highly ironic that a large, successful company such as Amazon is going to great measures to submit the data of their sellers to HMRC so that they can comply with tax laws.
In the last few years, some of the world’s biggest companies have come under public scrutiny for somewhat suspicious circumstances around the level of tax they pay. For example, Starbucks has sales around £500 million, but yet they don’t pay any corporation tax. Amazon’s sales were somewhere around 10 times that amount, but they only paid around £2 million in tax. HMRC is chasing small sellers for measly sums while big companies get away with not paying millions of pounds.
Amazon is now actually under formal investigation due to its European corporate tax practices and their relationship with Luxembourg is being looked at closely. However, as recently reported by The Guardian, Amazon has will begin paying corporation tax through the UK. It has been a common problem for many years with subsidiaries of multinational companies being able to hide subsidies and receive preferential treatment. They can structure their companies and shift profits between their different branches in varying countries in order to pay as little tax as possible. The EU has been aware of this and wants to ensure that these companies pay their fair share of tax.
How exactly is Amazon handing data over to HMRC? By displaying a note on their sellers’ dashboards about new tax legislations. Essentially, they are just notifying sellers that they can send over all the sales data to HMRC. This should not faze us at all if we are being honest and are already organised with our tax returns. However, many sellers on Amazon are not indeed big businesses, but individuals who just want to make some extra cash to help pay their bills; just like the majority of sellers on eBay. These sellers have proven to be a bit lazy with their tax returns, as they often do not declare this extra income.
However, it seems that, at the moment, HMRC have not actually bothered to cross check the data with tax records and so the only sellers who are being hit by this new data submission, are those who are up to date with their tax returns!
A similar situation is occurring on eBay too, as HMRC are now contacting business sellers on the auction site to see if they are paying their taxes. However, HMRC may be targeting the wrong sellers. There are plenty of businesses on eBay who are trading as private sellers whilst not declaring their income. It seems that these are the ones that HMRC should be focusing on.
The moral of the story is: just be honest and file your tax returns properly and you will have nothing to worry about!