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<p>The Government takes the issue of VAT evasion by overseas sellers on online platforms
very seriously. In September 2016 the Government introduced new legal powers allowing
HMRC to hold online marketplaces jointly liable for future VAT liabilities of non-compliant
overseas sellers on their platforms.</p><p>One of HMRC’s methods for tackling this
problem is to make both bulk and individual data requests of online marketplaces about
the sellers on their platforms, to inform enquiries into any possible non-compliance.</p><p>
</p><p>HMRC began making such requests after the introduction of the new powers in
September 2016. Over time, the quality of the bulk data being provided by online marketplace
platforms has improved, significantly reducing the need for HMRC to make additional
data requests on individual sellers.</p><p> </p><p>As a result, the number of compliance
enquiries HMRC have completed into overseas online sellers is not directly related
to the number of individual data requests. In 2020-21, where there has been a significant
reduction of individual data requests, the number of actual enquiries completed has
increased from just under 7,000 in 2019-20 to more than 9,400 in 2020-21 so far.</p><p>
</p><p>Where, following compliance enquiries using bulk or individual data and other
information, HMRC have made an online marketplace liable for the future VAT of a non-compliant
seller, the marketplace has the option instead to remove that seller and prevent them
from selling on their platform. This significantly disrupts the trade of that non-compliant
seller.</p><p>Number of data requests</p><p> </p><p>In order to inform enquiries about
potential non-compliance by overseas sellers on online market places, HMRC send both
bulk and individual data requests to online platforms. The number of bulk requests
and individual requests on sellers using their service in each of the tax years specified
are:</p><p> </p><table><tbody><tr><td><p><strong>Year</strong></p></td><td><p><strong>Bulk</strong></p></td><td><p><strong>Individual</strong></p></td></tr><tr><td><p>2016-17</p></td><td><p>0</p></td><td><p>299</p></td></tr><tr><td><p>2017-18</p></td><td><p>9</p></td><td><p>1,556</p></td></tr><tr><td><p>2018-19</p></td><td><p>10</p></td><td><p>2,317</p></td></tr><tr><td><p>2019-20</p></td><td><p>7</p></td><td><p>2,684</p></td></tr><tr><td><p>2020-21
(to date)</p></td><td><p>7</p></td><td><p>80</p></td></tr></tbody></table><p> </p><p>HMRC
did not make data requests prior to 2016, when new powers relating to online marketplaces
were introduced. As explained above, with the quality of bulk data improving over
time, HMRC have been able to improve their processes in 2020-21 and reduce their reliance
on individual data requests while still completing more enquiries.</p><p>Revenue measured
and sellers disrupted</p><p>Rather than ‘VAT recouped’, and in line with other compliance
activity, revenue measured by HMRC when using their powers to tackle online marketplace
sellers is tracked both in terms of the amount of revenue loss from the Exchequer
that has been prevented (Revenue Loss Prevented, RLP) and the amount of VAT assessed
and collected (Cash Collectable, CC). For this compliance activity, HMRC also track
the number of non-compliant overseas sellers disrupted following removal from an online
marketplace platform.</p><p> </p><p>HMRC began using the new powers introduced by
the Government in September 2016 (and so no results are available for 2015-16). While
HMRC started to disrupt non-compliant sellers in the first year the powers were introduced,
results are primarily seen after compliance cases were concluded, starting in 2017-18.
For the years requested, from 2016-17, the results are:</p><table><tbody><tr><td><p><strong>Year</strong></p></td><td><p><strong>CC
(£m)</strong></p></td><td><p><strong>RLP (£m)</strong></p></td><td><p><strong>Sellers
disrupted</strong></p></td></tr><tr><td><p>2016-17</p></td><td><p>0</p></td><td><p>0</p></td><td><p>40</p></td></tr><tr><td><p>2017-18</p></td><td><p>106</p></td><td><p>10</p></td><td><p>2,019</p></td></tr><tr><td><p>2018-19</p></td><td><p>34</p></td><td><p>86</p></td><td><p>3,977</p></td></tr><tr><td><p>2019-20</p></td><td><p>13</p></td><td><p>40</p></td><td><p>4,780</p></td></tr><tr><td><p>2020-21
(to Jan)</p></td><td><p>21</p></td><td><p>51</p></td><td><p>4,000</p></td></tr></tbody></table><p>
</p><p>Officials working on the activity</p><p> </p><p>Rather than the number of Full
Time Equivalent (FTE) employees deployed at a specific point in time on this compliance
activity, HMRC track this using Staff Year Usage (SYU), which shows the resource used
averaged out over a financial year.</p><p> </p><p>In total in 2019-20, HMRC used 176
staff years on this activity. Year to date in 2020-21 (end of January 2021), HMRC
have used 150 staff years on this activity.</p><p> </p><p>HMRC expect to use the same
level of staff years on this activity in 2021-22.</p>
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