Major websites which offer online marketplaces in the UK, including Amazon and eBay, have come under fire from a government committee after issues with VAT fraud were highlighted, according to the Guardian.

This issue stems from the fact that sellers based outside of the UK can use these digital storefronts to offer items to British buyers while avoiding the 20 per cent value added tax charge that would normally be applicable.

This type of fraud makes it harder for retailers based domestically to compete on price, since VAT will be included in anything they sell while overseas outlets have a loophole that lets them get around this.

The committee went on to slam HMRC for not doing its bit to cut down on this type of tax fraud, claiming that it costs the country’s coffers far more than the £1.5 billion figure which has been estimated in the past.

Spokesperson, Meg Hillier, said that while retailers that offer safe shopping online via marketplaces have made promises to police these services more thoroughly, there is evidence that a lot of dodgy deals are still slipping through the cracks at the moment.

VAT must be applied to goods sold to British buyers via safe shopping online if they are stored in the UK at the time of the sale. Overseas retailers can subvert this rule by using marketplaces, but regulators are seeking to stop this practice in its tracks where possible.

Amazon and eBay are not the only websites implicated in this case, but they are the most prominent names mentioned and the committee members argue that they are effectively profiting from this fraudulent sales practice while hurting UK retailers in the process, which is why a change has to be made to avoid further damage.