eBay robot aims to track down VAT dodgers

As our fascination with everything eBay-related continues, the Government has revealed that HMRC has enlisted the help of a robot in its efforts to cut down on eBay seller tax dodgers.

According to the National Audit Office, last year around 22 million Britons shopped online buying everything from CDs to electrical goods, food and holidays. Sales over the internet trebled to £18.1 billion in the period 2002 to 2004 with a further surge around Christmas 2005.

The Revenue collected over £1 billion in VAT in 2005-06 on e-commerce goods and services. The proportion of VAT collected by the Department from e-commerce transactions is likely to grow substantially with sales expected to hit nearly £60 billion a year by April 2010.

According to the NAO, the main risk of businesses failing to register and pay VAT on e-commerce lies with businesses trading solely on the internet and people who trade on e-marketplaces such as eBay.

As a result of the increase in VAT-dodging, The Revenue is taking some innovative steps such as developing an advanced search engine, called Web Robot, which helps to identify online businesses which should register for VAT, but have not. It is hoped that this "robot" should assist HMRC in carrying out more extensive and cost effective checks.

Sir John Bourn, head of the NAO, said:

“I find it encouraging that HM Revenue and Customs is well positioned to manage the current risks to VAT from electronic commerce. With internet sales set to mushroom in the next few years, the Department faces a challenge to ensure it stays ahead of the game. Some businesses are inventive at side-stepping VAT, and the Department must be equally innovative in guaranteeing the Exchequer gets the revenue it is due.”