Amazon and eBay have been ordered to hand over tens of thousands of members’ details as part of HMRC’s ongoing crackdown on tax evasion. From May 2nd, regular online traders and those who buy items to sell on at a profit have been receiving letters from HMRC. The letters state that the traders have the opportunity to pay their tax immediately and benefit from reduced penalties. Those who fail to comply will be hit with far higher penalties if HMRC has evidence that they have not paid the correct amount of tax. Some could even face criminal proceedings.
In reality, only a small number of people using online marketplaces will be classed as trading by HMRC, but the tax they owe could be significant. In 2011, an eBay trader from Croydon was jailed for 20 months for evading £430,000 of tax while selling electrical goods online between 2007 and 2010. HMRC have made it clear that this latest campaign is not aimed at people who occasionally sell a few personal items to raise some extra cash. However, those who do receive letters and fail to come forward before the June 14th deadline will face a penalty of between 40% and 100% of the tax due, as opposed to 10% or 20% if they rectify matters promptly.
An HMRC spokesperson said that people who regularly sell goods or services “are almost certainly trading”. This is likely to include people who buy items in order to sell them on at a profit. They went on to say: “We want to make sure that in the future all e-marketplace sellers will know what they need to do to keep their tax affairs in order.”
If you are a regular online trader and you haven’t been declaring your income, you should do so immediately. Experienced online traders learn to make savings elsewhere, such as by bulk-buying packaging or using specialist eBay couriers rather than Royal Mail to collect and deliver goods.
For more information about your tax status, contact HMRC directly.