A WEST WALES landlord has been overwhelmed with an astonishing number of letters from HM Revenue and Customs (HMRC) after more than 11,000 overseas Chinese companies used his address to register for VAT.

Dylan Davies, an estate agent from Ceredigion who owns a flat in Cardiff, expressed his frustration at receiving over 6,000 letters to his apartment since September of last year.

Tax officials have stated that they have found “no evidence of any fraud” in this peculiar situation. Mr. Davies, 65, recounted his initial surprise when he discovered a cascade of brown envelopes tumbling out of his letterbox. “Back in September, I was there one day and opened the letterbox and all these brown envelopes fell out.

“I counted about 580 that one time,” he told Herald.Wales.

When his attempts to contact HMRC failed to yield a response, he turned to the Welsh BBC consumer show X-Ray, which subsequently aired his story.

“That woke up everybody then. All of a sudden I heard from HMRC,” he said. “By that time [the end of 2022], I think I had about 3,000 letters. Now I’ve had over 6,000 letters…I had a letter from HMRC in March that they would be looking into it. They apologized…they made sure that no more post would arrive at my address – but they’re still arriving. I had 20 there last week.”

Among the deluge of letters were demands from debt collection agencies. “[X-Ray] opened a small amount of those, and the debt was over half a million…that was only a small portion of the letters I’ve had.” Mr. Davies admitted that the ordeal had been a “very, very worrying time” before X-Ray intervened.

“I was just knocking my head against the wall. I just wanted somebody to recognize I had this issue…just to show that I was innocent in all this. But I couldn’t get any responses,” he explained. He added, “I was having visions of bailiffs coming and charging the door down one night and taking everything you’ve got in the house.”

Mr. Davies also expressed concern about the potential impact on his own business due to the incident. “It was the worry of what word would get about – like whether I’m involved in VAT fraud…if I woke up in the middle of the night, I wouldn’t go back to sleep because it just worries you.”

According to Mr. Davies, his solicitor had sent two letters to HMRC prior to the BBC show, but they did not receive a response. During a recent appearance before the House of Commons Public Accounts Committee, HMRC CEO Jim Harra apologized for the delay in responding to Mr. Davies’ solicitor. He explained that the letter had been delivered to an old HMRC address and took some time to be redirected, before being “mishandled” within the department.

By the time HMRC finally addressed the issue, Mr. Davies had already gone public with his story. Mr. Harra expressed gratitude for Mr. Davies contacting the department and apologized for the lack of prompt action following their initial contact. He described the incident as “very odd” and “very curious,” but reassured the committee that HMRC was confident that no fraud had been committed against them as a result.

“We have been seriously investigating it, but at this point, we cannot find any indication of wholesale fraud as a result of it. Whether it was an unsophisticated attempt to do so, which didn’t work, it’s difficult to tell,” Mr. Harra stated.

He further explained that the businesses in question were overseas firms selling goods to the UK through online marketplaces

like eBay or Amazon. A change in the law in January 2021 mandated that online marketplaces collect VAT from foreign businesses and remit it to HMRC.

Mr. Harra noted that HMRC was aware of the risk of overseas businesses impersonating UK entities to avoid accounting for VAT through the online marketplace. However, additional checks carried out by these platforms prevent such deception. “Simply registering at a UK correspondence address does not pass those tests. So that in itself could not con an online marketplace into thinking that they are a UK business. And sure enough, when we have looked into businesses on this long list, we’ve found that for the vast majority of their sales via online marketplaces to UK customers, VAT has been accounted for by the online marketplace [since 2021],” explained Mr. Harra.

Out of the 11,000 businesses registered at Mr. Davies’ address, over 2,356 owe a tax debt to HMRC, but these debts pre-date the 2021 online marketplace rule, making the companies primarily responsible for payment. However, there is currently no requirement for proof of residence at a UK address when registering for VAT.

“We have no address with which to correspond with these 2,300 businesses until we have resolved the addresses issue,” Mr. Harra informed the committee. HMRC conducts additional checks, including requesting evidence of business establishment at the provided address, for applications or changes in registration that meet certain risk criteria.

According to Mr. Harra, it would be highly unusual for fraudsters to use an address not under their control. When asked if HMRC systems flag instances where a large volume of letters is sent to a single address, he clarified that it is quite common for a significant number of foreign businesses to register at a single serviced office correspondence address in the UK, where their tax agent can handle the extensive correspondence on behalf of overseas clients.

Ben Lake, the Plaid Cymru MP for Ceredigion, expressed concern about HMRC’s systems in light of a residential address in Wales unexpectedly receiving over 11,000 letters and businesses changing their address to that property. He sought reassurance that his constituent would not face any formal demands or enforcement action from HMRC due to the mix-up.

Mr. Harra stated that HMRC took action in March to prevent further correspondence to Mr. Davies’ address. However, when Mr. Lake pointed out that his constituent had continued to receive letters since then, the tax boss admitted that their existing systems were imperfect and promised to explore implementing additional alerts.

Mr. Harra affirmed that HMRC is still conducting investigations into the incident, acknowledging the tremendous inconvenience and distress it has caused Mr. Davies. The department is also reviewing its procedures to prevent a recurrence of similar incidents in the future.