Amazon paused payments to some seller accounts having introduced stricter VAT checks, impacting the cash flow of many small businesses.

Government minister, Kevin Hollinrake, has demanded Amazon releases the funds it is withholding from hundreds of sellers under new VAT checks recently introduced. Many small businesses claim that being denied access to their funds leaves them vulnerable and in some cases facing possible bankruptcy. The enterprise minister said he was “very concerned” after up to 400 traders appealed to small business commissioner Liz Barclay for help.

Toys and Games makes up a significant proportion of Amazon’s business, particularly in Q4 and around promotional periods such as Black Friday and Prime Day. Having achieved high sales volumes during this time, toy sellers naturally expect access to their funds as soon as possible.

Amazon has paused payments to some sellers while it carries out stricter checks to ensure they are based in the UK for tax purposes. Additional documents are now required to be provided by sellers to prove they operate in the country, and while the checks are being carried out, Amazon has taken the step of feeezing funds, leaving businesses unable to cover taxes and other costs.

Kevin Hollinrake said: “We are writing to Amazon to tell them to unfreeze the accounts until they have a proper process in place. We understand why they are doing it – we need to ensure VAT is collected – but doing it on a knee-jerk basis, especially at a time when there is self-assessment due, is pretty ill-timed.”

In a letter to Amazon’s UK chief executive, John Boumphrey, the minister said: “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. The government has been inundated with email appeals for help from desperate sellers in danger of losing their businesses.”