THE UK Government is being urged to work with Amazon to tackle the scourge of online merchants been frozen out of their accounts by HMRC red tape.

The SNP have demanded ministers and the firm work together to come to a solution to problems and delays to VAT checks which have seen hundreds of small businesses selling goods on Amazon frozen out of their accounts and denied substantial sums.

HMRC requires that online retailers check that retailers are based in the UK so VAT can be applied.

But Amazon freezes the accounts of those under investigation, a process which can take weeks, leaving many denied the ability to withdraw money earned through sales.

The National: Richard Thomson MP in the House of Commons Chamber

Richard Thomson (above), the SNP’s business spokesperson, told The National that UK Government red tape was “slowing business down”.

He said: “Delays in the processing of these crucial checks are preventing many small businesses from being able to operate, and even pay tax and VAT.

“With a cost of living crisis and a recession raging, it’s important the UK Government and Amazon do everything it can to empower businesses from being able to trade normally – instead, this is an example of them slowing business down.

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“The UK Government has a responsibility to support business and must work with Amazon to find a solution that will allow companies to continue to trade on Amazon while checks are undergone in the background.”

He said that action from ministers “could make the difference between small business owners being able to keep staff, pay bills, or even continue to exist”.

An Amazon spokesperson said: “To comply with VAT legislation and help combat tax fraud, we recently began a process to perform additional verification of the VAT status of all sellers, in the UK and abroad, that sell on our UK store.

“While we tried to make this process as smooth as possible, it did not meet the high standards that we hold ourselves to and we apologise to sellers who experienced issues with verification.

“We are taking this situation extremely seriously, committing additional resources to improve and speed up the process. We’ve already verified the majority of sellers, and we are working to verify the remaining sellers as quickly and smoothly as possible.

The National: Amazon

“We encourage Government to continue to improve the public information available to determine if a seller is UK-based for VAT purposes.”

A spokesperson for HMRC said: “We do not freeze online seller accounts in cases like these. To calculate their correct VAT liability, online marketplaces need to check if a business is based overseas as well as the location of goods sold on their platform; HMRC does not carry out these checks.

“Rules that require online marketplaces to take reasonable steps to determine if they are liable for VAT have been in place since January 2021.

“We will take a supportive approach to dealing with customers who may be experiencing issues.”