Taking steps to report VAT Fraud?
So,we are a brand manager to a manufacturer we work with very closely (located in China) one day, we see that there is a major Chinese seller with an immense amount of sales volume that wasn’t quite authorized to sell the brand on Amazon.
However, upon performing a test purchase we saw that it was an authentic product they were selling, but they were selling these products for dirt cheap (in comparison to all other prices, anywhere in Europe.)
I began working with the company owner to try to track down where they received the products from, we sent emails to the seller with no avail as they pushed the pricing down lower and lower. Eventually we went down the supply chain and found that this seller uses a distribution company located in Hong Kong that works with the manufacturer to purchase items for him. He is the third hand touching the merchandise, yet is selling most of his products on Amazon for cheaper than anywhere in Europe.
When the company we work with finally got a hold of the distributor that was purchasing for this Chinese individual in Hong Kong, they pretty much spilled the beans when asked how is it that they are offering their prices for so low by stating that the seller he is working with has “ways around paying VAT” as it makes sense that there would only be profit by selling these items for so low if not paying VAT.
The kicker is that we were also informed that he has another Amazon seller account, upon further investigation… low and behold… there is “another” Chinese seller on Amazon, selling the exact line of products for marginally questionable pricing. They also said that apparently he had another Amazon account a few months ago that got suspended (reasons unknown) but he just decided to pop up with 2 more… incredible how “easy” it is to just go about creating Amazon accounts in China…
Anyway, I don’t really know what to do with all of this information… Do I report it to someone? I’m sure Amazon won’t do anything about it and brush it off… Any advice? Just keep to myself and keep on truckin’? lol After all, I don’t have concrete evidence, just going off of what people say / overheard…
Taking steps to report VAT Fraud?
So,we are a brand manager to a manufacturer we work with very closely (located in China) one day, we see that there is a major Chinese seller with an immense amount of sales volume that wasn’t quite authorized to sell the brand on Amazon.
However, upon performing a test purchase we saw that it was an authentic product they were selling, but they were selling these products for dirt cheap (in comparison to all other prices, anywhere in Europe.)
I began working with the company owner to try to track down where they received the products from, we sent emails to the seller with no avail as they pushed the pricing down lower and lower. Eventually we went down the supply chain and found that this seller uses a distribution company located in Hong Kong that works with the manufacturer to purchase items for him. He is the third hand touching the merchandise, yet is selling most of his products on Amazon for cheaper than anywhere in Europe.
When the company we work with finally got a hold of the distributor that was purchasing for this Chinese individual in Hong Kong, they pretty much spilled the beans when asked how is it that they are offering their prices for so low by stating that the seller he is working with has “ways around paying VAT” as it makes sense that there would only be profit by selling these items for so low if not paying VAT.
The kicker is that we were also informed that he has another Amazon seller account, upon further investigation… low and behold… there is “another” Chinese seller on Amazon, selling the exact line of products for marginally questionable pricing. They also said that apparently he had another Amazon account a few months ago that got suspended (reasons unknown) but he just decided to pop up with 2 more… incredible how “easy” it is to just go about creating Amazon accounts in China…
Anyway, I don’t really know what to do with all of this information… Do I report it to someone? I’m sure Amazon won’t do anything about it and brush it off… Any advice? Just keep to myself and keep on truckin’? lol After all, I don’t have concrete evidence, just going off of what people say / overheard…
10 replies
Seller_EHYOwAkoZV3Hb
Unless you have an exclusive deal with your manufacturer and he agrees not to sell to others for sale in your markets, this will happen again and again.
Chinese sellers (primarily, as we are talking about China) will always find new ways of evading vat although it is a little harder now.
You should report them to Amazon and HMRC but have low expectations of a satisfactory result.
Seller_QlN0mmCAFPtjZ
Well if you have sufficient information than report it , however you need solid evidence not just hearsay . Someone like the accountant of the guilty party that can show the evidence . What what you say here , it seems you have no hard evidence but simply hearsay .
Amazon and the authorities often have cases where a competitor tries to make another competitors life difficult by making unsubstantiated claims . Not saying you are , but the authorities probably receive thousands of often false claims . Without real evidence or an insider’s co- operation your allegations against the other seller will not stand up .
Seller_cVSM84sGQN86R
What are the value of these items, the only crime I can see them committing is possible under declaring the value of their packets. That’s not quite the same as VAT evasion particularly for Amazon sellers.
Seller_VjI0BvZiOIBQK
Please pass the information on to vatfraud.org
They are well aware of the practice of ‘Phoenix accounts’. Just yesterday I spoke to a UK wholesaler who has said he was offered several container loads of stock destined for Amazon by UK fulfilment houses. They have been given this stock by means to pay their fees by Chinese sellers removed from Amazon.
Last week over 10,000 Chinese VAT evaders were removed from Amazon.co.uk
vatfraud.org will pass on this information to the HMRC online compliance team.
Seller_rZax50qrWcaoG
The VAT issue is a problem (if it exists) but I think this is more about your listing and being upset that they are selling the same product at a lower price. Reporting them to Amazon and HMRC may help but as others have said, without concrete evidence there is little you can do.
A brand manager doesn’t infer any exclusive rights to sell the product, therefore, the manufacturer is free to offer his goods for sale to anyone willing to buy them, and in this case the distribution company located in Hong Kong is one of them. Unless there is some sort of restriction in place, he in turn can then resell them to whoever wants to buy them. So, the buyer (then seller) is merely selling the same product as yours, albeit it at a lower price (which is fair competition).
I would be a bit surprised if any Chinese manufacturer would offer anyone exclusive rights to a product (unless you are willing to spend millions with them) as they are in business to make money, and lots of it.
Seller_qZO3ZCjoBXEeL
Are they FBA or sent from China? They don’t have to register or pay VAT on sales sent from China until they hit £70,000 UK turnover.
Seller_x1xMSBwZsJrTE
I would also report them to Amazon for having multiple accounts selling the same stuff. Give them the seller names of all the accounts you are aware of. This is against Amazon’s T & C’s so if they won’t do anything about the VAT fraud they should remove them for the multiple accounts.
Having said that do hold your breath. I reported a Chinese seller about 2 months ago for multiple accounts and Amazon have done nothing.
I’m thinking of basing my business in China, it seems as far as Amazon are concerned you can do whatever you please.
