Tech distributors can do more to spot and call out online PC sellers who are selling below cost and not paying tax, says More Computers' Brian Trevaskiss.
He told PCR: "We see online traders come from nowhere and start selling from distie feeds at cost or cost plus 30p, we work with every distie in the UK and can spot people with feeds. We've seen people go below cost, which we can only assume is because of some kind of VAT fraud.
"Selling at cost is not a sustainable business model, but these people seem to be not interested in a long term business. In a short space of time they put thousands of sales through - you can see that from the number of reviews they accumulate.
"As the quantity of their sales increases they seem to get credit from distribution, even though a credit insurance check shows sparse company details and no recommendation for credit.
"We can only assume their strategy is to make thousands of below cost sales (they don't intend to ship) in a month, then disappear at the end of that month and not pay anybody, including the tax man. They probably throw in a slice of cross-border VAT fraud for good measure.
"Everybody suffers as a result; Customers don't get their orders and lose faith in smaller online sellers. The established, honest online sellers lose sales they would normally have won. Distribution end up with bad debts. Vendors see all online traders the same and demand their products are removed from distie feeds.
"We'd like distributors to be doing more. They're in a good position to spot people who are not necessarily building a long term business, or online retailers who have a business model that doesn't really add up."
His comments come after a Guardian investigation claimed that tech goods such as smartwatches, tablets, wearables and cameras are being sold on Amazon’s UK website without VAT being charged.
HMRC has set up a unit to investigate VAT evasion by overseas online traders, and the Government is currently exploring whether the likes of marketplace websites such as Amazon and eBay can be forced to cough up to pay for the VAT fraud committed by some online traders.
Last October, some PC retailers backed a petition to stop VAT fraud on eBay and Amazon by Chinese, Non-EU and UK businesses.
PCR also recently discovered one online marketplace trader that went out of business late last year after owing around £500,000 to the tax man and distribution.
Documents seen by PCR show the trader owed the likes of Entatech, Exertis, Target Components, Westcoast, EET Europarts, Terra Computers and others thousands of pounds.
The article is part of our PCR Trader Trust campaign. We’re calling on vendors, disties, retailers, resellers and more to inform us of anyone that may be selling illegal or counterfeit goods, conning customers and partners, or acting unethically.
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