Soon HMRC will have access to your eBay and PayPal account
The Government recently published its draft Finance Bill 2016. You can find out more on gov.uk about this wide ranging bill.
But down in the details I found a small amendment that will be of interest to anyone trading online using a marketplace such as eBay and payment providers such as PayPal. It’s billed as “Tackling the hidden economy: extension of new data-gathering powers“.
Legislation will be introduced in the Finance Bill 2016 that will amend the Finance Act 2011 by adding two new categories of data-holders that HMRC will be permitted to serve notice on to get information.
The new categories are: business intermediaries and electronic payment providers operating digital wallets.
As the policy paper notes: “These measures will give HM Revenue and Customs (HMRC) the powers it needs to tackle the digital hidden economy. They provide HMRC with a new power to gather data from business intermediaries who facilitate transactions, particularly online, and electronic payment providers who operate digital wallets. HMRC will then be able to compare that third party data with its own information to identify those businesses who are failing to register with HMRC or are not declaring the full amount of the tax they owe.”
It’s expected that by 2020, the new powers will help HMRC an additional £285m for the Government’s coffers.
The Government adds: “These measures are expected to benefit compliant businesses by ensuring a level playing field between those businesses who comply with their tax obligations, and those that do not.”
And, obviously, if everything is in order there’s not much for any seller to worry about. And this could be a useful power in tackling the issue of overseas, often Chinese sellers, who aren’t complying properly with VAT rules. But then, if you’re playing fair on your tax then how would you feel about HMRC poking their nose in and getting all your sales and payments records?
But a few questions are worth considering which we’re not clear about. eBay and PayPal’s previous position was that if HMRC came to them with specific requests on individual accounts then they would provide such requested information. But could this new power be used to get blanket info about all sellers? Could they potentially get the full sales records of all eBay sellers if they wanted? Or will they still need to approach it on a case by case basis? Not sure.
And could this move beyond tax evasion into the automatic inclusion of eBay and PayPal (and other firms) data into the ongoing digitisation of tax returns? It’s not inconceivable in the years to come that your sales could almost automatically be pumped to HMRC for inclusion in your tax return. A long way off perhaps… but once government has a power, it’s very hard to rescind it.