A man got sent 580 letters on one day demanding tax payments after Chinese companies used his address, report says
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- 11,000 companies used a man's address to register for sales tax, BBC News reported.
- Dylan Davies, from Cardiff, Wales, was sent 580 letters in one day in connection with sales tax.
- The UK tax authority said it's taken action to stop Davies being contacted over payments.
A man received 580 letters in one day demanding payment for sales tax bills after thousands of Chinese companies fraudulently used his home address to register for tax, BBC News reported.
Dylan Davies, from Cardiff in Wales, started getting the letters from UK tax authority HM Revenue & Customs (HMRC) telling him to pay sales taxes, known as VAT, in November.
Davies continued to get tax bills for 11,000 companies that had used his address over the following months despite informing HMRC and the police. The total amount came to about £500,000 ($620,000).
"You'd think there'd be a systems with the technology today that would have picked it up immediately," Davies told BBC News.
He became concerned that debt collectors would turn up at his home and take property from him after he started getting letters from some.
Davies said the tax authority only took action when BBC Wales consumer programme X-Ray reported his story.
The chief executive of HMRC, Jim Harra, wrote a letter to parliament's public accounts committee stating that 2,356 of the Chinese companies owed tax and that it had taken action to stop "any further contact" with Davies, per the report.
Harra added that its investigation had found "no evidence of fraud or fraudulent intent" and that 70% of the companies registered to Davies' address were online marketplaces.
In 2021 a law governing how online marketplaces pay VAT changed following the UK's departure from the European Union. It meant that overseas sellers on platforms such as Amazon and eBay should collect sales tax from overseas traders and pay HMRC. However, it did not require proof of address if a company registered a UK address for VAT purposes.
Davies told BBC News that the tax authority should have more robust rules and said it seemed simpler to "register a company for VAT than it is to go and get a bus pass".
Graham Barrow, a financial crime consultant, told the outlet that the Chinese firms appeared to be collecting VAT from customers but were not passing the funds on to HMRC.
"There's no other reason why you'd register for VAT at a complete stranger's address, particularly for 11,000 companies to do that," he told BBC News.
A representative for HMRC told Insider: "We are reviewing our operational processes for managing high volume address changes, including understanding any vulnerabilities in our systems associated with this behaviour."