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Babz media

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Comments

  • lovinituk
    lovinituk Posts: 5,711 Forumite
    1,000 Posts Combo Breaker
    Where did this info come from?
    I've heard it from several sources in the same industry. The figure might not be accurate but it does appear they have defrauded Royal Mail for a substantial sum.

    It appears that's how they were making any profit at all on their impossibly low prices!
  • jamo76
    jamo76 Posts: 10 Forumite
    The issue with the environmental agency did not have any impact on this, and a company with this amount of turnover getting a £45k fine is no big deal to HMRC. It would not draw their attention unless a tax scheme was involved and abused. It is irrelevant to this much bigger issue.

    Babz were under investigation by Royal Mail for some time. When a fraud of this scale is discovered, the longevity of the fraud is important in the compensation; and Royal Mail clearly needed to demonstrate this in court. You would struggle to demonstrate 4 years fraud from a month's investigation. I estimate the investigation may have been ongoing for a year. Despite privatisation, Royal Mail's revenue protection department is still a UK competent authority able to prosecute directly and apply for account seizures and so on. It is likely that they informed HMRC as a matter of courtesy, however, HMRC have also been concentrating heavily on eBay sellers to discover tax evasion. HMRC announced this tactic some time ago. Also HMRC would be automatically made aware upon any account seizure/freezing of assets.

    The information that I have heard from two independent suppliers to Babz was that Royal Mail are pursuing them for around £5m. I have not heard figures of £15m although I could well be wrong as intrinsically, all of this is still hearsay. I also heard that Babz owed between £3m and £4m to HMRC. I have not heard whether this tax liability is fraudulent evasion, delinquent debts or simply something benign like a VAT return or corporation tax which accrued normally; but when something of this nature occurs, HMRC clearly want their cut of the proceeds. For a company of this size's assets and accounts to be frozen, everyone will want a piece of the pie during insolvency.

    To paraphrase a previous user, everyone on eBay selling in those spaces knew exactly what was going on. The mathematics of the item cost prices, taxes, marketplace fees, and shipping, could not be added up and that doesn't even take into account wider company overheads. It just wasn't possible to do it without one part of the equation being illegitimate. I sincerely hope this does indeed level the playing field for sellers who play by the rules.
  • jamo76 wrote: »
    I sincerely hope this does indeed level the playing field for sellers who play by the rules.

    Aren't there tons of Chinese sellers doing the same thing? Their numbers rarely add up either.

    Anyone else wishing they had bulk bought some stuff before they went under? :p
  • RFW
    RFW Posts: 10,425 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    jamo76 wrote: »
    I sincerely hope this does indeed level the playing field for sellers who play by the rules.
    To my (limited) knowledge of that business they are certainly not the first to do something similar. There's at least two gone before on a similar turnover in similar markets, one in packaging and one in batteries. I'd assume there are more and if it's made as easy to do there will undoubtedly others willing to take their place.
    .
  • Any online market sellers that had business with them would guess they were not competing fairly. Once for every single package - even 99p ones, they were using signed for service and I knew by heart that they weren't possibly paying the extra 1 pound for signature to Royal Mail. Also if you google them, you'll find they were not VAT registered for years despite selling millions of items. Their business is based on cheating the system as much as possible. Probably after paying all the fines, they will still have millions of pounds and start a similar business under a different name.
  • Tar123zan wrote: »
    Any online market sellers that had business with them would guess they were not competing fairly. Once for every single package - even 99p ones, they were using signed for service and I knew by heart that they weren't possibly paying the extra 1 pound for signature to Royal Mail. Also if you google them, you'll find they were not VAT registered for years despite selling millions of items. Their business is based on cheating the system as much as possible. Probably after paying all the fines, they will still have millions of pounds and start a similar business under a different name.

    Do you have the links to prove any of this?
  • RFW
    RFW Posts: 10,425 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Tar123zan wrote: »
    Any online market sellers that had business with them would guess they were not competing fairly. Once for every single package - even 99p ones, they were using signed for service and I knew by heart that they weren't possibly paying the extra 1 pound for signature to Royal Mail. Also if you google them, you'll find they were not VAT registered for years despite selling millions of items. Their business is based on cheating the system as much as possible. Probably after paying all the fines, they will still have millions of pounds and start a similar business under a different name.
    Lots of unfounded speculation in there. To start backwards, if they were able to pay their fines and have millions left over they wouldn't need to start under a different name. More likely they wouldn't pay any fines and liquidate the company, then start a new business;)
    Not VAT registered for years sounds unlikely, it would possibly be beneficial for a company working on low/no margins to be registered for VAT.
    As has been said in this thread they had an RM account and the signed for service wouldn't have been costing them £1 (whether they paid for it or not). It works on averages, so they could be paying the same postage for 99p item as a £99 item.
    As for the first point most businesses think their more successful competitor are competing unfairly so it's never a good reason to think they actually are.
    .
  • So how do you sell something on eBay for 99p inc signed post and still make a profit?
    "Love you Dave Brooker! x"

    "i sent a letter headded sales of god act 1979"
  • forgotmyname
    forgotmyname Posts: 32,952 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    So how do you sell something on eBay for 99p inc signed post and still make a profit?

    By paying pennies for the item and a discount on the postage?
    Censorship Reigns Supreme in Troll City...

  • RFW
    RFW Posts: 10,425 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    So how do you sell something on eBay for 99p inc signed post and still make a profit?
    To put aside that I did say that the seller could have been sending a 99p item for the same cost as a £99 item and working on averages.
    It's not a business model I'd like to use ever but it's possible.
    Something that goes as a letter that is easy to process. If you use a micro Paypal account that fee is less, so you can get a 30-40p profit. Shipping 1000 a day would then earn over £2000 per week.

    There is also the point that some sellers will be happy not to earn on it, it can be cheap advertising for them. Lots of companies have enough money behind them that they are happy to lose on products for a while to build up a customer base.
    .
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