0:00:00 > 0:00:05Now on BBC News, it's time for Panorama.
0:00:08 > 0:00:09Tonight on Panorama -
0:00:09 > 0:00:15we set up our own company to expose a billion pound tax scandal.
0:00:15 > 0:00:17Hello, Bilton's Bargains - cheap goods, no VAT!
0:00:17 > 0:00:27We go undercover to show how the fraud works.
0:00:27 > 0:00:31The special, special way, you don't need to have VAT.
0:00:31 > 0:00:36We sell our fraudulent goods on eBay and Amazon.
0:00:36 > 0:00:39It's pretty shocking, isn't it, that you can do it so easily
0:00:39 > 0:00:43and so openly, so blatantly.
0:00:43 > 0:00:50We ask, who is protecting British taxpayers?
0:00:50 > 0:00:54Trading Standards are like taking a bow and arrow to fight with,
0:00:54 > 0:00:56with tanks when they're taking on huge global multi-billion pound
0:00:56 > 0:00:58turnover businesses...
0:00:58 > 0:01:01And what does the taxman say when we tell him
0:01:01 > 0:01:05we've broken the law?
0:01:05 > 0:01:07It's something that you should not have done.
0:01:07 > 0:01:15I'll speak to you when the cameras have stopped rolling about that.
0:01:20 > 0:01:22If you're white van man, today's a big day.
0:01:22 > 0:01:25It's Cyber Monday.
0:01:25 > 0:01:27Everyone's ordering Christmas presents and they
0:01:27 > 0:01:32all need delivering.
0:01:32 > 0:01:37It's one of Amazon and eBay's busiest days.
0:01:37 > 0:01:41But as you click to buy, you might be taking part in a fraud.
0:01:41 > 0:01:45It's an online tax scam
0:01:45 > 0:01:48that's costing the country more than a billion pounds a year,
0:01:48 > 0:01:53and putting British firms out of business.
0:01:54 > 0:01:59We've set up a British company, Bilton's Bargains -
0:02:00 > 0:02:02and we're going to join in the scam.
0:02:02 > 0:02:04I'm going to use both eBay and Amazon to sell
0:02:04 > 0:02:09my illegal products.
0:02:09 > 0:02:12What we're looking at here is evasion of VAT by overseas
0:02:12 > 0:02:15sellers who sell to UK consumers online and the rate of evasion
0:02:15 > 0:02:20by those retailers is quite high.
0:02:20 > 0:02:25It's between £1 billion and £1.5 billion a year
0:02:25 > 0:02:27in lost VAT to the exchequer.
0:02:27 > 0:02:29But it also undercuts legitimate traders who are complying
0:02:29 > 0:02:30with their tax obligations
0:02:30 > 0:02:33but who find it difficult to compete with those who don't,
0:02:34 > 0:02:38so that's two reasons why we need to crack down on it.
0:02:38 > 0:02:44This is a scam that starts at the other side of the world.
0:02:44 > 0:02:48And that's where Bilton's Bargains has come to buy its stock.
0:02:48 > 0:02:51This is Hong Kong.
0:02:51 > 0:02:57These ships are packed with the things we all buy.
0:02:57 > 0:03:03When most of this stuff arrives in Europe, tax has to be paid,
0:03:03 > 0:03:10VAT, which helps pay for our public services.
0:03:10 > 0:03:14But thousands of traders are evading the tax.
0:03:14 > 0:03:16I've come here to commit a crime.
0:03:16 > 0:03:18I'm going to buy a load of electronic goods,
0:03:18 > 0:03:21ship them back to the United Kingdom and sell them on Amazon.
0:03:22 > 0:03:29But I'm not going to pay the VAT to the tax man.
0:03:29 > 0:03:34Criminals have been getting away with this fraud for years.
0:03:34 > 0:03:36Well, look, we know that we've had online marketplaces
0:03:37 > 0:03:39and we need to make sure that our tax authorities
0:03:39 > 0:03:43are able not just to deal with this but are ahead of the curve
0:03:43 > 0:03:45for whatever the next scam down the line is,
0:03:45 > 0:03:48and that's a real concern.
0:03:48 > 0:03:50Criminals are dodging two types of VAT.
0:03:50 > 0:03:52They're evading VAT at the border when it's imported.
0:03:52 > 0:04:00That's up to 20% of the value of the goods.
0:04:00 > 0:04:03And then they're not charging VAT
0:04:03 > 0:04:08when they sell the goods to customers.
0:04:08 > 0:04:11There is two key moments where VAT stops working so well
0:04:11 > 0:04:15from an evasion and fraud perspective.
0:04:15 > 0:04:19From the moment you stop complying with the law,
0:04:19 > 0:04:20you're in the fraud territory.
0:04:20 > 0:04:23And so the people who are abusing e-commerce, they're fraudsters?
0:04:23 > 0:04:30They're fraudsters.
0:04:30 > 0:04:34VAT is complicated, but what we're about to do isn't.
0:04:34 > 0:04:38Bilton's Bargains is going to buy goods here, ship them back to the UK
0:04:38 > 0:04:44without paying VAT and then sell them online.
0:04:44 > 0:04:48So, for this plan to work, we need a shipping agent in China to help us
0:04:48 > 0:04:51get the goods back to the UK.
0:04:51 > 0:04:54I'm in Hong Kong and I'm just, I'm doing the first stage
0:04:54 > 0:04:57which is ringing the agents and trying to line them up.
0:04:58 > 0:05:01So, this is a guy, let's see what he says for himself.
0:05:01 > 0:05:04Hello?
0:05:04 > 0:05:04Hi.
0:05:04 > 0:05:05Is that Jonas?
0:05:05 > 0:05:06Yes, yes.
0:05:06 > 0:05:08Hi Jonas, it's Richard.
0:05:09 > 0:05:09Oh, yes, hi.
0:05:09 > 0:05:10I know you.
0:05:10 > 0:05:16First, will our shipping agent help us dodge import VAT?
0:05:16 > 0:05:18You know what we're doing -
0:05:18 > 0:05:21we're taking some stuff back from Shenzhen, back to the UK.
0:05:21 > 0:05:23Now, we are, we're not VAT-registered.
0:05:23 > 0:05:23Is that okay?
0:05:24 > 0:05:24It's okay.
0:05:24 > 0:05:29We can use special, special way.
0:05:30 > 0:05:35Under your special method, I can avoid all VAT?
0:05:35 > 0:05:36Yes, yes.
0:05:36 > 0:05:36Correct.
0:05:36 > 0:05:37Right, that's good.
0:05:37 > 0:05:41And so this is obviously something that you're used to doing then,
0:05:41 > 0:05:43Jonas, you seem very confident about it?
0:05:43 > 0:05:46Yeah, yes.
0:05:46 > 0:05:50We arrange to meet the agent face-to-face in a couple of days.
0:05:50 > 0:05:52I mean he, he couldn't have been any clearer.
0:05:52 > 0:05:56He said there are special methods - you won't pay any VAT.
0:05:56 > 0:06:00That's just a guy who's got a business in China and part
0:06:00 > 0:06:05of his business is ducking out and avoiding VAT in the UK.
0:06:05 > 0:06:11It's extraordinary to hear that.
0:06:11 > 0:06:16So, now we need something to sell.
0:06:16 > 0:06:18Shenzhen in southern China
0:06:18 > 0:06:23is the heart of the online electronics industry.
0:06:23 > 0:06:26If you buy a hard drive or a charger on the internet,
0:06:26 > 0:06:32there's a good chance it comes from here.
0:06:32 > 0:06:35This is one of the largest shopping centres in the world
0:06:35 > 0:06:35for electronic goods.
0:06:36 > 0:06:40There are thousands of products to choose from.
0:06:40 > 0:06:43So, next stop is the factory.
0:06:43 > 0:06:50Our rep from Bilton's Bargains checks out our goods.
0:06:50 > 0:06:57The undercover reporter buys 300 bluetooth speakers.
0:06:57 > 0:07:00Let's be clear about what we're about to do.
0:07:00 > 0:07:06We plan to smuggle these speakers to the UK without paying VAT.
0:07:06 > 0:07:12Welcome to the glamourous world of online retail.
0:07:12 > 0:07:15If we get away with it, they'll go to an Amazon
0:07:15 > 0:07:17warehouse in the UK.
0:07:17 > 0:07:22So, our fraudulent goods will then be stored,
0:07:22 > 0:07:31sold and delivered by Amazon.
0:07:31 > 0:07:37But first, we have to get our goods to them.
0:07:37 > 0:07:40Time to catch up with Jonas, our shipping agent.
0:07:40 > 0:07:45He works for a company in downtown Shenzhen.
0:07:45 > 0:07:47Ready?
0:07:47 > 0:07:49Jonas.
0:07:49 > 0:07:51Oh, Jonas, nice to meet you.
0:07:51 > 0:07:53Hi, Jessica, nice to meet you.
0:07:53 > 0:07:55Great.
0:07:55 > 0:07:57Jonas recommends a route through Holland
0:07:57 > 0:08:02with our speakers hidden inside a bigger order.
0:08:02 > 0:08:07This is his "special way".
0:08:07 > 0:08:14We use third party country like we ship to Netherlands first
0:08:14 > 0:08:22to do the fiscal clearance to avoid VAT and duty, then deliver to UK.
0:08:22 > 0:08:25The special, special way, you don't need to have VAT.
0:08:25 > 0:08:28Actually, my customer have been three years use this
0:08:28 > 0:08:37way but nothing happen.
0:08:37 > 0:08:40Actually, there are so many seller in China, sell to US, UK,
0:08:40 > 0:08:46Amazon shipment, business they also don't have VAT.
0:08:46 > 0:08:48We've just negotiated a way of breaking the law -
0:08:48 > 0:08:52getting our goods to Amazon without paying VAT.
0:08:52 > 0:08:53Bye, bye.
0:08:53 > 0:08:54Thank you so much.
0:08:54 > 0:08:55Thanks very much.
0:08:55 > 0:08:57Bye.
0:08:57 > 0:08:58His company later told us
0:08:58 > 0:09:01that it was illegal to secretly film in China.
0:09:01 > 0:09:14They declined to comment further.
0:09:14 > 0:09:21Hello, Bilton's Bargains - cheap goods, no VAT!
0:09:21 > 0:09:25VAT crime is not just a little scam by foreign traders,
0:09:25 > 0:09:28it costs jobs in this country.
0:09:28 > 0:09:31If you don't pay VAT, you can sell the goods cheaper.
0:09:31 > 0:09:44And UK traders, who are paying their taxes, cannot compete.
0:09:44 > 0:09:47People like Neven and Roni.
0:09:47 > 0:09:49They were top online sellers
0:09:49 > 0:09:55until fraudulent traders started to undercut them.
0:09:55 > 0:09:58These guys are bringing stock into the UK, not paying VAT
0:09:58 > 0:10:01on it and when it's sold, they don't pay VAT that's
0:10:01 > 0:10:05due on the sale either.
0:10:05 > 0:10:08They are selling it 20% cheaper, um, because they're not charging VAT.
0:10:08 > 0:10:14Then, you know, it's impossible for us to reach those prices.
0:10:14 > 0:10:15That's why a lot of the...
0:10:15 > 0:10:17our other UK competitors have
0:10:17 > 0:10:19dropped away, you know, they, they've given up and giving
0:10:19 > 0:10:21up is not an option for us.
0:10:21 > 0:10:25Four years ago, they saw a 60% drop in their sales and almost went bust.
0:10:26 > 0:10:28They only survived by laying off all their staff,
0:10:28 > 0:10:34including Roni's brother.
0:10:34 > 0:10:37All I could see was a big black void.
0:10:37 > 0:10:48It was just like, we're gonna go bust.
0:10:48 > 0:10:49The hardest thing was making...
0:10:49 > 0:10:52I mean making anybody redundant
0:10:53 > 0:10:56is horrendous but when it's your family and it's their main income,
0:10:56 > 0:10:59and saying, "Look, I'm sorry but, you know, we just can't
0:10:59 > 0:10:59afford you anymore".
0:11:00 > 0:11:03So that was, I think that was the hardest thing for me.
0:11:03 > 0:11:04Pleased to meet you, Rich.
0:11:04 > 0:11:05Are you well?
0:11:05 > 0:11:08So, talk me through your background then so you...
0:11:08 > 0:11:11I was basically forced out of business by companies that were
0:11:11 > 0:11:17avoiding VAT.
0:11:17 > 0:11:20Richard Allen used to be an online seller until his company went bust.
0:11:20 > 0:11:25Now he campaigns to stop VAT fraud.
0:11:25 > 0:11:29If you are running a shop or a mail order business in the UK
0:11:29 > 0:11:32you are obligated by law to pay VAT
0:11:32 > 0:11:38and you will be most likely caught if you don't charge VAT.
0:11:38 > 0:11:43But if you are sticking goods in a warehouse in Amazon, and you're
0:11:43 > 0:11:50Chinese, it appears that you can just allow that to, that is allowed
0:11:50 > 0:11:53to continue even when people know it's happening that's not,
0:11:53 > 0:11:58you know whatever the excuse, that's not an acceptable situation.
0:11:58 > 0:12:01Amazon and eBay say VAT fraud is bad for business
0:12:01 > 0:12:06and they take it very seriously.
0:12:06 > 0:12:09They say they want fair play for all sellers,
0:12:10 > 0:12:14so they work closely with HMRC, sharing information about foreign
0:12:14 > 0:12:18sellers and blocking them when fraud is suspected.
0:12:18 > 0:12:22But Amazon and eBay profit from these illegal traders
0:12:22 > 0:12:26because they charge them fees to use their services.
0:12:26 > 0:12:32They've known about what's been happening for years.
0:12:32 > 0:12:40eBay were told in 2009, 2011, and a number of times since.
0:12:40 > 0:12:43Amazon have been aware since at least 2015,
0:12:43 > 0:12:45and we still see blatant offences, businesses that aren't
0:12:45 > 0:12:48declaring their VAT numbers.
0:12:49 > 0:12:51And these are things that global, multi-billion pound companies
0:12:51 > 0:12:55should be able to identify and get a handle on.
0:12:55 > 0:12:56Isn't this easily solved?
0:12:56 > 0:12:59You and your Trading Standards colleagues just get out there
0:12:59 > 0:13:02and catch all the bad guys?
0:13:02 > 0:13:04Trading Standards services have, you know, too little resources.
0:13:05 > 0:13:07They've lost half their staff, half their budgets since 2009.
0:13:07 > 0:13:10Trading Standards are like taking a bow and arrow to fight with,
0:13:11 > 0:13:13with tanks when they're taking huge global multi-billion pound
0:13:13 > 0:13:22turnover businesses.
0:13:22 > 0:13:24Trading standards think Amazon and eBay could reduce the fraud
0:13:24 > 0:13:27by one simple measure - making foreign sellers
0:13:27 > 0:13:35who hold stock in the UK display valid VAT numbers.
0:13:35 > 0:13:37So, here you find examples of sellers that are,
0:13:37 > 0:13:40where the business has no business details whatsoever, including
0:13:40 > 0:13:44a lack of VAT number.
0:13:44 > 0:13:46We've raised this and you'll see here, still today,
0:13:46 > 0:13:51there's no VAT number on there.
0:13:52 > 0:13:53So, they're just openly breaking the legislation?
0:13:53 > 0:13:57Blatantly breaking the legislation.
0:13:57 > 0:14:05This company has now finally got a VAT number.
0:14:05 > 0:14:09The law says VAT numbers should be accessible but there's a dispute
0:14:09 > 0:14:16about what that means for online marketplaces like eBay and Amazon.
0:14:16 > 0:14:20HMRC says it's not a legal requirement for sellers
0:14:20 > 0:14:25to display a VAT number.
0:14:25 > 0:14:28But the taxman says both Amazon and eBay have agreed to make
0:14:28 > 0:14:33sure that those numbers are displayed anyway.
0:14:33 > 0:14:36I understand that Amazon and eBay do now have it as part
0:14:36 > 0:14:38of their processes, to ask for a VAT number.
0:14:38 > 0:14:41And they check the validity of that number.
0:14:41 > 0:14:48And, uh, require that number to be shown on their website.
0:14:49 > 0:14:52I think they're doing that for new sellers coming onto their sites
0:14:52 > 0:14:54and they're working through the sellers that are already there.
0:14:55 > 0:14:58I think for HMRC's point of view, that - that is a welcome step.
0:14:58 > 0:15:02If they didn't have a VAT number displayed, what would your instinct
0:15:02 > 0:15:03be, whether they had one or not?
0:15:03 > 0:15:07That makes them very high risk from our point of view and we do
0:15:07 > 0:15:10risk assess all of those cases and we do investigate and,
0:15:10 > 0:15:13for example, we've had 400 cases where we've had the market,
0:15:13 > 0:15:20the sellers thrown off the marketplace already.
0:15:20 > 0:15:23So, will Amazon check if we have a VAT number?
0:15:23 > 0:15:24When we registered Bilton's Bargains
0:15:24 > 0:15:28we were asked for a VAT number but the box said "optional".
0:15:28 > 0:15:43We were still allowed to register after leaving it blank.
0:15:45 > 0:15:51Amazon says it's committed to "helping HMRC identify the small
0:15:51 > 0:15:54number of bad actors who are not VAT compliant".
0:15:54 > 0:15:57And that sellers agree to pay taxes when they sign
0:15:57 > 0:15:58the terms and conditions.
0:15:58 > 0:16:01Amazon says Bilton's Bargains was not asked for a VAT number
0:16:01 > 0:16:03because it's a British company and might be exempt.
0:16:04 > 0:16:06But we know Amazon don't always make foreign companies provide
0:16:06 > 0:16:18a VAT number either.
0:16:18 > 0:16:21You only have to go on Amazon or eBay to see how widespread
0:16:21 > 0:16:23the problem is.
0:16:23 > 0:16:25There are thousands of foreign traders selling goods
0:16:25 > 0:16:27from within the UK.
0:16:27 > 0:16:32And many do not have VAT numbers.
0:16:32 > 0:16:35I also did some mystery shopping in preparation for our hearing
0:16:35 > 0:16:40on this, and it was just ridiculously easy to buy goods
0:16:40 > 0:16:44and ask for a VAT certificate, and only to find that they didn't
0:16:44 > 0:16:46want to give you one, they didn't have one,
0:16:46 > 0:16:48they were trying to fob you off.
0:16:48 > 0:16:52In the end, I was offered a 20% discount on one item to try
0:16:52 > 0:16:53and buy me off.
0:16:53 > 0:16:57eBay and Amazon say the level of VAT fraud is lower than HMRC's estimate
0:16:57 > 0:17:00of more than a billion pounds a year.
0:17:00 > 0:17:03They also say they try to prevent fraud by offering information
0:17:03 > 0:17:08and training to sellers about the VAT rules.
0:17:08 > 0:17:11But we were able to dig deeper into Amazon's data.
0:17:12 > 0:17:16We checked their top Chinese sellers in Europe.
0:17:16 > 0:17:2260% of them didn't display a valid VAT number.
0:17:23 > 0:17:25If 60% of Chinese sellers, the top Chinese sellers on Amazon,
0:17:25 > 0:17:29are not listing a VAT number, how does that make you feel?
0:17:29 > 0:17:32Does that make you feel a bit like you're losing?
0:17:33 > 0:17:35I think - I don't think we are losing.
0:17:35 > 0:17:47I think we are winning.
0:17:47 > 0:17:49We're already having a big impact.
0:17:49 > 0:17:52For example, in 2015 only 700 overseas online sellers registered
0:17:52 > 0:17:53for VAT in the UK.
0:17:53 > 0:17:57In 2016, that went up to over 8000, But 60% of the top sellers are not
0:17:57 > 0:17:58bothering with VAT.
0:17:58 > 0:18:00It means the system's just not working.
0:18:00 > 0:18:04I think it's indicative of the high level of noncompliance that we know
0:18:04 > 0:18:06exists in this sector, which is why we've taken
0:18:06 > 0:18:09the additional powers that we have and why we're seeking further powers
0:18:09 > 0:18:10to tackle that.
0:18:10 > 0:18:12You've had these powers for 11 months.
0:18:12 > 0:18:14How many prosecutions have you made?
0:18:14 > 0:18:17We think prosecution is a tool that we can use if we can
0:18:17 > 0:18:20get our hands on criminals, but actually we don't think it's
0:18:20 > 0:18:23an effective way to manage this evasion, to rely on criminal
0:18:23 > 0:18:24investigation and prosecution.
0:18:24 > 0:18:25How many have you had?
0:18:25 > 0:18:29We haven't prosecuted anyone, and I think it's going to be very
0:18:29 > 0:18:31difficult to prosecute people because the sellers are overseas,
0:18:31 > 0:18:32they're outside the UK.
0:18:32 > 0:18:35It's very difficult to reach them, very difficult to prove things
0:18:35 > 0:18:36to a criminal standard.
0:18:36 > 0:18:40What we need to do is change the behaviour, get the tax and make
0:18:40 > 0:18:41people comply going forward.
0:18:41 > 0:18:44Remember our crime - it was all about whether we could
0:18:44 > 0:18:51get our goods into the UK without paying import VAT.
0:18:51 > 0:18:52Well, now we know.
0:18:52 > 0:18:54Our speakers have arrived in the UK.
0:18:54 > 0:18:57They cleared customs in Holland - as the agent said they would -
0:18:57 > 0:19:03hidden inside a larger delivery.
0:19:03 > 0:19:09So, that's VAT of £312 evaded.
0:19:09 > 0:19:12Well, it's pretty shocking, isn't it, that you can do it
0:19:12 > 0:19:18so easily and so openly, so blatantly, and we need to make
0:19:18 > 0:19:21sure that there are systems in place to stop that happening.
0:19:21 > 0:19:27Even just to make it a bit more difficult for people to scam it,
0:19:27 > 0:19:30would stem some of the flow, and that would be a start.
0:19:30 > 0:19:33But there's a lot more that needs to be done.
0:19:33 > 0:19:35And Amazon stored our fraudulently imported goods.
0:19:35 > 0:19:39This is where our speakers ended up.
0:19:39 > 0:19:42So, our goods have arrived with Amazon.
0:19:42 > 0:19:44We bought them in China, shipped them to the UK
0:19:44 > 0:19:49without paying VAT.
0:19:49 > 0:19:53We got away with the crime.
0:19:53 > 0:19:57And Amazon profited from it.
0:19:57 > 0:19:59Bilton's Bargains paid £838 in fees for storage,
0:19:59 > 0:20:03delivery and billing.
0:20:03 > 0:20:07We didn't want other people to get caught out by our scam -
0:20:07 > 0:20:11so I bought all 300 speakers.
0:20:11 > 0:20:14Amazon says it cannot know whether import VAT has been paid,
0:20:14 > 0:20:19and that "no VAT fraud took place" in relation to our sales.
0:20:19 > 0:20:21It has "multiple methods for checking the legitimacy
0:20:21 > 0:20:23of seller accounts", and "Bilton's Bargains
0:20:23 > 0:20:28has been suspended".
0:20:28 > 0:20:31Now, you might find one of Amazon's main arguments surprising.
0:20:31 > 0:20:34The company says it's not a major part of the supply chain
0:20:34 > 0:20:38for VAT purposes.
0:20:39 > 0:20:46Even though Amazon stores, sells and delivers the goods.
0:20:46 > 0:20:49I bought things on Amazon that are invoiced by Amazon,
0:20:49 > 0:20:51delivered by Amazon, packed by Amazon, that
0:20:51 > 0:20:52involve fraudulent transactions.
0:20:52 > 0:20:55So I really can't see how they can distance themselves from it.
0:20:55 > 0:20:58And it should be made a cost of their business
0:20:58 > 0:21:06collecting this tax.
0:21:06 > 0:21:10And that might be about to happen.
0:21:10 > 0:21:13The European Union wants to make online marketplaces collect VAT,
0:21:13 > 0:21:18in the same way that shops do.
0:21:18 > 0:21:21So, one of the issues that we have right now,
0:21:21 > 0:21:23is that there's nobody who's actually taking responsibility
0:21:23 > 0:21:25for ensuring that the system works.
0:21:25 > 0:21:31So we have to make those warehouses, and particularly the online
0:21:31 > 0:21:33retailers - the online websites - take legal responsibility
0:21:33 > 0:21:36for collecting the VAT and passing it on to the country
0:21:36 > 0:21:42where the customer is located.
0:21:42 > 0:21:46That at the moment is not the case, and that's one of the changes that
0:21:46 > 0:21:52could happen as early as by the end of this year.
0:21:53 > 0:21:55But I did break the law, and I should confess.
0:21:55 > 0:21:57It's time to come clean with you, actually.
0:21:57 > 0:21:59We smuggled some goods into the country.
0:21:59 > 0:22:05And we didn't pay VAT.
0:22:05 > 0:22:08How do you feel about that?
0:22:08 > 0:22:10It's something that you should not have done.
0:22:10 > 0:22:13And I'll speak to you when the cameras have stopped
0:22:13 > 0:22:17rolling about that.
0:22:17 > 0:22:20But, you know, do I believe it is completely impossible
0:22:20 > 0:22:23to smuggle goods into the UK without paying duties if you're
0:22:23 > 0:22:24determined to do so?
0:22:24 > 0:22:25Of course, it's not.
0:22:25 > 0:22:33It, like any other part of the tax system, there is leakage around it.
0:22:33 > 0:22:34So, what about eBay?
0:22:34 > 0:22:37Well, they say that 98 % of sales involving Foreign sellers now
0:22:37 > 0:22:39have a valid VAT number.
0:22:39 > 0:22:41And in September, this is what they told Parliament.
0:22:41 > 0:22:44For foreign sellers, who are the primary focus of this
0:22:44 > 0:22:47issue, we require that they display a valid VAT number, which we check
0:22:47 > 0:22:52through the VIES system.
0:22:52 > 0:22:54And we make sure that sellers display that,
0:22:54 > 0:23:01and we've also asked them to put that on their listing.
0:23:01 > 0:23:03We wanted to check if that was true.
0:23:03 > 0:23:07So, a week later, we committed another crime.
0:23:07 > 0:23:12This time we imported 270 mobile phone cases for sale on eBay.
0:23:12 > 0:23:15To really test the system, we moved Bilton's Bargains
0:23:15 > 0:23:18HQ to China.
0:23:18 > 0:23:22On eBay, we registered as a foreign trader.
0:23:22 > 0:23:25Once again, our goods sailed through customs.
0:23:25 > 0:23:31Import VAT of £203 evaded.
0:23:31 > 0:23:34Now eBay have told Parliament that they check the VAT numbers.
0:23:34 > 0:23:39But we listed our mobile phones cases up on the eBay site
0:23:39 > 0:23:41without a VAT number.
0:23:41 > 0:23:49It was easy to break the law.
0:23:49 > 0:23:55We sold one phone cover and bought it back ourselves.
0:23:55 > 0:23:58eBay then limited our account for 30 days, because we're a new seller -
0:23:58 > 0:24:03they say this restriction helps reduce all fraud.
0:24:03 > 0:24:05eBay said "the block was very largely effective".
0:24:05 > 0:24:08And it meant that our account "was unable to sell...
0:24:08 > 0:24:13270 iPhone covers".
0:24:13 > 0:24:16But you told me that you were confident that eBay check
0:24:16 > 0:24:19for a VAT number before they deal with a new business.
0:24:19 > 0:24:22We were a new business, and nobody asked us anything.
0:24:22 > 0:24:23Quite the opposite.
0:24:23 > 0:24:24Happy to deal with us.
0:24:24 > 0:24:26Well, that is the evidence that they have given,
0:24:27 > 0:24:29and that's the process that they have shown us in action.
0:24:29 > 0:24:31Didn't happen.
0:24:31 > 0:24:33Um, I think that applies, I think that's something that
0:24:33 > 0:24:35they're applying to overseas sellers.
0:24:35 > 0:24:37We were a Chinese company. Didn't happen, sir.
0:24:37 > 0:24:38Well, we'll need to...
0:24:38 > 0:24:38It's nonsense.
0:24:38 > 0:24:40We'll need to look into that.
0:24:40 > 0:24:42It's easy to break the rules.
0:24:42 > 0:24:45Well, as I say, if they helped you break the law, then
0:24:45 > 0:24:47that is clearly something we could do something about.
0:24:47 > 0:24:50Our VAT-free speakers have arrived at the office.
0:24:50 > 0:24:51Packaged and delivered by Amazon.
0:24:51 > 0:24:57Our phone cover from eBay has arrived too.
0:24:57 > 0:25:09We have successfully evaded VAT - twice.
0:25:09 > 0:25:13But what's remarkable about this crime is eBay and Amazon helped us
0:25:13 > 0:25:15sell our products - and profited from our dodgy sales.
0:25:15 > 0:25:24eBay says it has "taken a strong stance on VAT non-compliance",
0:25:24 > 0:25:32and is "determined to stamp down hard on it".
0:25:32 > 0:25:35It says it "goes above and beyond what's required",
0:25:35 > 0:25:43and uses its "own detection methods to block sellers" who don't comply.
0:25:43 > 0:25:47Amazon say they now have VAT numbers that cover 95% of sales from foreign
0:25:47 > 0:25:51sellers who use an Amazon warehouse.
0:25:51 > 0:25:53It also says...
0:25:53 > 0:25:55"Tens of thousands of British businesses generate billions
0:25:55 > 0:25:58of pounds in revenue every year" by selling on their marketplace.
0:25:58 > 0:26:15We cheated the taxman to highlight the flaws in the system.
0:26:15 > 0:26:19Last week, the government announced it would tighten the law.
0:26:19 > 0:26:22Now, online marketplaces like eBay and Amazon will be forced to make
0:26:22 > 0:26:28sellers display a VAT number.
0:26:28 > 0:26:31Now, it's time for me to pay for my crime,
0:26:31 > 0:26:36because I've come here today to confess.
0:26:36 > 0:26:40So I want to give you this cheque, if I may, for £514.74,
0:26:40 > 0:26:45which is the money that we've evaded.
0:26:45 > 0:26:48Does it make you worried, sir, about how you're going to get
0:26:48 > 0:26:52the other billion if we could break the law so easily?
0:26:52 > 0:26:55It certainly is a big challenge for us to get that.
0:26:55 > 0:26:58Do I believe that we have got the responses in place
0:26:58 > 0:27:01that is going to get all of that taxes being evaded?
0:27:01 > 0:27:06No, no I don't.
0:27:06 > 0:27:10And if you look at the difference that we think we can make to this,
0:27:10 > 0:27:12it's clear that there's more that we need to do.
0:27:13 > 0:27:16We shipped goods from the other side of the world and evaded tax.
0:27:16 > 0:27:18It was easy.
0:27:18 > 0:27:19Look, it's not rocket science.
0:27:19 > 0:27:22If you don't think you're going to be caught or inspected,
0:27:22 > 0:27:27you might just not bother too much.
0:27:27 > 0:27:30If you are buying something from a company that's not paying
0:27:30 > 0:27:33VAT, and aren't based in the UK, you are effectively killing
0:27:34 > 0:27:36a British company and the people that work for that company.
0:27:37 > 0:27:38The British taxman didn't stop our crime.
0:27:38 > 0:27:49And Amazon and eBay profited from our illegal sales.
0:27:49 > 0:27:51There's people in HMRC who could've stopped it,
0:27:51 > 0:27:52who haven't stopped it.
0:27:52 > 0:27:54They should take responsibility and you know, they're losing
0:27:54 > 0:27:57the country billions of pounds.
0:27:57 > 0:28:01We broke the law to show how easy it is for crooks to steal more
0:28:01 > 0:28:03than a billion a year.
0:28:03 > 0:28:05Bilton's Bargains is no longer trading -
0:28:05 > 0:28:10but thousands of fraudsters are cashing in this Christmas.