Government minister Kevin Hollinrake has demanded Amazon unfreezes the funds it is holding back from hundreds of sellers under new VAT checks that have left some small businesses facing possible bankruptcy.
The enterprise minister said he was “very concerned” after up to 400 traders appealed to small business commissioner Liz Barclay for help following the retail giant withholding their money for months.
Amazon has paused payments to some sellers while it carries out stricter checks to ensure they are based in the UK for tax purposes.
The retailer now requires additional documents from sellers to prove they operate in the country.
As a result, many businesses have been left sitting in limbo for months, and are unable to cover taxes and other costs, with some concerned they could collapse.
Hollinrake said: “We are writing to Amazon to tell them to unfreeze the accounts until they have a proper process in place.
“We understand why they are doing it – we need to ensure VAT is collected – but doing it on a knee-jerk basis, especially at a time when there is self-assessment due, is pretty ill-timed.”
Writing in a letter to Amazon’s UK chief executive, John Boumphrey, Hollinrake said: “I would urge you to look into this issue further as a matter of urgency and ensure you are supporting those whose accounts have been impacted by this.
“We’ve been inundated with email appeals for help from desperate sellers in danger of losing their businesses.
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“A 70-year-old couple this morning, in business for 40 years, is unable to pay VAT, tax and bills, and others can’t afford to feed their families, because their accounts are frozen. People are waiting for…up to £300,000.
“The mental health problems emanating from this are dire. Small firms need to be paid quickly to carry on operating. This must be resolved immediately before a tragedy occurs.”
Hundreds of sellers on the online platform have written complaints since the beginning of January, according to The Telegraph.
Retailers have expressed their concerns to officials from the Business Department and HMRC, the publication understands.
Amazon claimed it was obligated to collect VAT on transactions that involved overseas sellers under laws implemented in January 2021.
A spokesman for the company said: “Under UK tax legislation, online stores are required to collect and remit VAT on transactions involving overseas sellers. We therefore require verification of all sellers, which may include additional requests for information about where they are based.
“We aim to minimise any inconvenience this may cause sellers and they can contact our support teams for further advice.”
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We are one of the many affected by this.
We’ve had to go through VAT verification several times in the many years we’ve sold on Amazon and it’s always been a struggle as despite providing them with all the required information they just ask for the same information over and over again.
For them to say to contact support is laughable as support just give you a copy and paste answer of go and check the notifications so you are in a perpetual loop.
What makes it even worse is that they are not providing a secure environment for you to provide them with the information as you have to just email it in. Emailing enough documents to easily clone your information is a recipe for disaster.
There is no support from the so called seller support. We are on the verge of collapse paying staff and premises. Now owed £5500.
We do not sell in Europe anymore because of the rip off charges Amazon and vat accountants want to charge us. We have submitted all documents and have no acknowledgments that they are processing the so called checks. We have always been based in the UK.
We have around £45,000 held by Amazon with no further indication on when this money will be disbursed. It’s appalling that a business based in the UK with two British directors, can be treated this way after paying VAT to HMRC for the last 5 years without any issue. This heavy handed approach will be affecting thousands of selling partners, not hundreds, gauging by the Amazon seller forum posts in the both the UK, and the EU.
What makes this even more alarming is the method that Amazon are requesting documents. They require us to send them via email and not through a secure portal. We’re talking passports, driving licenses, VAT ID’s, bank statements, utility bills….. It’s a disgrace.
There are thousands of us. Most today had the payment block removed but we still cannot remove any of our stock and we still have this verification nightmare where we sent confidential docs to a random email address and we don’t know if they have been received or looked at it. Many are being asked for documents that don’t exist or are not suitable for that particular individual. I still have a notification saying that they need proof that I live and work in the UK, despite passports, HMRC statements, VAT cert, utility bills, bank statement and more, a lot more…So the threat of them taking 2 years of VAT that I have ALREADY PAID to HMRC is real.
As a small business seller on Amazon, what this article failed to say, and what is key to the story, is that Amazons AI / algorithm in the verification process is 100% to blame and not fit for purpose as sellers like myself sent over passport, driving licence, mortgage statement, self assessment statement, council tax bills, utility bills, business invoices and tax return – all proving that we live and operate in the UK but all were repeatably rejected. With amazon it is virtually impossible to speak to a human, instead bots / AI and algorithms are used. Day to day this makes using amazon very frustrating but during a serious episode like this, it increases stress levels tenfold.
I believe it took an email to my MP and to Liz Barclay to resolve. I was receiving up to 5 emails a day stating amazon needed more information from me. This is the real story, the story of a huge failing by amazon who unlawfully, in my opinion, froze our funds with no warning at all and left me in huge financial stress not to mention the mental health implications and strain on home life.
Like the Post Office, Amazon are a law unto themselves.
There are a few things I take offence at. Firstly my £22000 sales have been frozen – with the exception of the £6000 in Amazon fees – they have of course been released to Amazon. SO whilst I can’t pay my VAT bill, or my suppliers, or my staff – Amazon see to it that they get their pound of flesh. Secondly – the ludicrous suggestion that contacting the Amazon support teams is completely laughable. Amazon consistently offer no support to sellers. All you will get from Amazon is a copy and paste letting me know they are doing their best.
Not owed over £35,000 by Amazon who are disgracefully holding our money. Not even the MD John Boumphrey is willing to help. The documents they requested were already on our account but sent them immediately anyway. 3 weeks later, still holding my money.
We have sent 5 emails to John Boumphrey over the last 3 weeks & only get auto responses.
This VAT issue hasn’t been a problem for us, so far….
However the other things on Amazon that are not fair is that customers are sending different items back to us on the first scan refunds & we can’t get a resolution or our money back.
In April, they will be holding on to £1000s of sellers money because they need to make sure that we have “enough funds”, for refunds if needed. This is complete rubbish! Amazon have EVERY sellers credit card details, this is a situation that shouldn’t happen. Everyone that sells on Amazon desperately needs some assistance with these issues.
Whilst it’s always good to see a Government Minister involved – this continuing issue just shows the sort of business Amazon is – they are so big now they can do anything they like with complete contempt for their Marketplace sellers. There is no justification for holding my money – Amazon know for a fact where my business is based and registered already. And HMRC have expressly told Amazon there is no need to hold funds. BUT when have Amazon ever listened to authority?
We are having the same issue! We don’t operate in the UK, we are a Dutch company selling on Amazon In the Netherlands, Germany, France, Spain and Italy.
We sent in all the neccesary documents after an email that they had to verify that we are operating in the EU..
We got an email saying that the hold on the disbursement of our funds had been lifted, yet 2 weeks later we still can’t withdraw any of our €16.500,- in funds!!
Luckily Amazon is not the only platform we sell on so we will likely barely survive, but we need these funds asap!!
Amazon seller service has said the same thing 3 times: “we’ll urgently put it through to the Payments department, they will contact you soon”. Still haven’t contacted me after more than a week.
It’s insane to me that this is one of the biggest companies in the world and their processes are totally messed up and not functioning properly.
Mine and 100’s of other peoples money are still being held by Amazon. The first email said verification would take 3 days! 10 emails later, each of them asking for extra documents or the same information that had already been provided, or even totally irrelevant information unrelated to your circumstances.
Your try to speak to seller support and receive a cut and paste response offering no help or information, this then gets classed as resolved. There is a complete lack of communication, no one can, or will say when the verification process will be resolved, meaning Amazon continues keeping our money and not allowing sellers to claim their stock back.
The 3 days mentioned has now taken over 3 weeks and counting. Businesses have gone bankrupt, small business owners physical and mental wellbeing are hugely suffering. The Government has told Amazon to give our money back, it seems they haven’t listened and don’t care, they are too big and seemingly can do exactly as they please.
The government needs to step in here and validate sellersBusiness operating location. This will then releive the Amazon crap system of trying to maake this decision.
I personally am 71 years old and many of the sellers sell on Amazon to make up for poor pensions. This is leading to me having potential health issues which I am beginning to be very scared of .
Amazon stop this now!!
Its ridiculous!
OH MY! i thought we were the only company with a problem. We are UK based and amazon say we owe sales tax from sales we have through our company in FR France, Guess what? we don not have an amazon FR account and have never sold in France. Today (17th February) i have made the decision to put our Account on holiday with Amazon. We have sent over 10 e mails to e mail address,s that we were told to complain to. We received one e mail back from JUAN of Amazon saying because the unpaid tax was for a french account, they cannot see any specific details so we would need to contact Amazon France. Never received any replies. The power of Amazon has to be curtailed. BUT HOW?