Small business minister urges Amazon to unfreeze seller funds

Kevin Hollinrake, the UK government's small business minister, has called on Amazon to release funds to small businesses selling on the online marketplace after their accounts were frozen due to stricter VAT checks.

Amazon is checking whether sellers are based in the UK for tax purposes, but those investigations have led to a pause in money from sales being released to businesses.

Hundreds of small business owners have contacted the office of the Small Business Commissioner, which helps small firms tackle overdue payments from large companies, saying their cash has been withheld by Amazon for several weeks.

In a letter to John Boumphrey, Amazon's UK and Ireland vice present, Hollinrake said while he understands the need for checks to ensure Amazon is complying with tax legislation, they are impacting on small businesses' cashflow and ability to trade. Hollinrake wrote:

"While Amazon has said the checks should only take a few days, in many case it is taking much longer and has happened without sellers being given clear indication of when they will be able to trade again.

"Businesses are reporting having been asked repeatedly for information they have previously provided, asked to send personal documents over unsecured email and also report their frustrations at not being able to contact anyone in Amazon to deal with the problems that have arisen.

"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. I would also ask that, until Amazon is in a position to efficiently process applications and engage effectively with your sellers, you unfreeze all the accounts of small businesses still impacted and allow these vital businesses to continue to operate."

A spokesperson told the Telegraph:

"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."