The UK PAC (Public Accounts Committee) suggests that Amazon and eBay aren't taking issues like VAT fraud seriously, which is hurting the British tax payer and British business, allowing sellers who utilize online marketplaces like those two mentioned above to skirt having to pay the same taxes that legitimate businesses within the country do. A recent report by the PAC states that both Amazon and eBay have told them that they take the issue seriously, and that they have worked with HMRC (HM Revenue and Customs) to block sellers from their platforms which break the law requiring them to pay VAT fees, but the PAC doesn't think online marketplaces or the HMRC are doing enough to combat the problem.
While most of the blame is being presented as the fault of online marketplaces such as Amazon and eBay, and other online marketplaces which aren't named in the PAC report, HMRC is receiving a fair amount of blame itself for not tackling the issue of VAT fraud. The problem lies with third-party sellers who sell goods through these online marketplaces and are based outside of the EU and the UK. In this instance, technically these sellers and the marketplaces aren't required to charge VAT since they're not actually based in the region, but the problem comes from the goods that are being sold physically being stored in fulfillment centers that are on UK soil at the time of the transaction, which means the VAT should have to be charged to the consumer.
Even though Amazon and eBay are said to have worked with HMRC closely to block sellers from their platforms, commission from these sales is still being made, and sellers can only be blocked once HMRC has alerted the marketplaces to any wrongdoing, which is why a big part of the blame is being placed on HMRC in the first place, as it's suggested that it's not doing enough to bring these fraudulent sales to the attention of places like Amazon and eBay. According to the PAC, an HMRC estimate states that UK taxpayers have lost about £1.5 billion from VAT fraud, which is by no means a small amount, and that means a lot of tax revenue that isn't being attributed to the government. The PAC isn't actually taking any measures it seems to correct the issue, but it is suggesting that HMRC consider updating legislature to better attack the problem, and potentially seek any unpaid VAT revenue from past sales.