The online retail giant, which is used by more than 85,000 UK businesses to sell products, has paused cash payments to many small sellers as it conducts stricter checks to prove they are based in the UK for tax purposes. One seller had allegedly seen more than £300,000 frozen by the tech giant.
Amazon has been requiring additional documents from its retailers, often sole traders, to prove they operate out of the UK for the purpose of charging VAT.
However, companies caught up in the process say they have been left in limbo for months, unable to pay taxes and other costs, and some fear their businesses could collapse.
In a letter to Amazon’s UK chief executive, John Boumphrey, Mr 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.”
Ms Barclay said: “We’ve been inundated with email appeals for help from desperate sellers in danger of losing their businesses.
“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 £1,000 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.”
Wyatt Harris, a trader on Amazon, added: “Many sellers in the UK are now facing financial ruin.”
Hundreds of Amazon sellers have complained on the company’s forums since the start of January.
The Telegraph understands retailers met with officials from the Business Department and HMRC on Tuesday to express their concerns.
Amazon said that under laws introduced in January 2021, it is required to collect VAT on transactions involving overseas sellers. In some cases this has required further information from its users to confirm they are based in the UK.
An Amazon spokesman 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.”
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
