Amazon’s decision to freeze funds over VAT verification leads to legal threats.
- The move has affected hundreds of sellers, who now face financial distress.
- The frozen amounts could total tens of millions, according to legal representatives.
- Criticism has been directed at both Amazon and HMRC over the handling of the situation.
- Amazon is taking steps to address the issue, with most sellers already verified.
Amazon’s recent action to freeze funds of sellers unable to prove their VAT status is leading to potential legal repercussions. Hundreds of sellers feel financially trapped following the online marketplace’s stringent verification processes.
The legal firm Rosenblatt is building a case alleging amounts still held by Amazon are ‘potentially tens of millions’. Affected businesses report severe financial stress, with some facing bankruptcy.
The verification process, described by many as a ‘Kafkaesque nightmare’, has sellers resubmitting documents, hindered from stock removal, and experiencing withheld revenues. This has prompted mental health concerns amongst the seller community.
The situation arises from legislation introduced in 2021, mandating online platforms to ensure VAT compliance. Amazon partially attributes the problem to the UK’s tax authority HMRC changing standards unexpectedly.
Following public and seller backlash, Amazon stated it has verified the majority of affected accounts and committed to accelerating the process to resolve remaining issues.
Legal pressures are mounting on Amazon as it navigates compliance and seller relations amidst this contentious VAT verification issue.
