Did eBay or Amazon give HMRC my details?
Many eBay sellers up and down the country have been receiving the HMRC e-marketplaces letter and wondering why. If you’re a fully paid up member of the tax paying community making full disclosure to HMRC, paying your VAT, Corporation Tax, National Insurance and Income Tax why did they bother writing to you?
The explanation appears to be that HMRC simply fired out letters to everyone they know to be trading online. Doubtless they’ll find a number of people who are either behind with their tax or hiding, but there will still be thousands of traders who didn’t really need a letter.
The first question we at Tamebay asked is where did they get the data from? We asked a number of people, and when I received a copy of the HMRC mailing I rang up and asked again. The only marketplace they could have got my address from was from eBay and HMRC frontline staff simply stated that they “got the file of names direct from the e-marketplaces”. It seems strange that they didn’t also get my VAT number which is freely displayed alongside my name and address on all my eBay listings and eliminate me from their mailing.
Did eBay or Amazon hand your details over to HMRC?
eBay have told us that they “haven’t handed over seller data to HMRC”. That’s no surprise but we had to check. For the past 15 years eBay have refused to hand over seller data en masse to authorities around the world and for good reason, it’s incredibly valuable and confidential and if it fell into the wrong hands would totally compromise their business. Any competitor would have a field day if they had the 180,000 eBay UK business sellers’ names and addresses to market to.
Amazon take the same stance as eBay, there’s no way that they would hand over their entire seller database without being dragged kicking and screaming through the courts.
Cross checking data and cost of the HMRC e-marketplace campaign
It appeared to us that HMRC could have saved a substantial amount of money on postage, production of letters and call center time if they’d simply cross checked the data they’d gathered with their database of tax payers. The letters explain that if you’re up to date with your tax you don’t need to do anything but that leaves the cross checking to be done at a later date. The alternative is that HMRC will start chasing everyone they wrote to at some point in the time.
I’d recommend that if you receive a letter you give them a call and confirm your tax references to save being chased in the future. I suspect HMRC would quite like you to do this but didn’t say so as it would simply flood their hotline with calls.
HMRC response to Tamebay
An HMRC spokesperson told us:
HMRC gather information from a large number of sources including: online advertising, seller rankings, our hotlines, and from the eMarketplaces themselves where UK and EU law allow it.
Customers trading on eMarketplaces who are behind with their tax still have until 14th June to come forward and let us know that they want to put their affairs in order.
We wrote to as many people as possible in May who we knew to be selling on eMarketplaces, to let them know about the opportunity. The letters explain that if their affairs are in order, they need do no more. We wanted to do this well ahead of 14th June deadline so that customers would still have time to act if they needed to.
Since the letters were sent we have gathered more information and now hold data on over 100K people. HMRC are assessing this data, and we will begin contacting customers who have chosen not to come forward after 14th June, if we have reason to believe they owe tax.
This campaign is intended to give anyone owing tax an opportunity to come forward and clean up their tax affairs and avoid the full penalties that normally apply for late disclosure, intentional non-disclosure or late payment. HMRC probably gathered the majority of their data from “Seller Rankings” or in other words scraping eBay for Business Seller names and addresses.
It’s likely that it’s cheaper and more effective to simply mail all (or a large proportion of) online sellers than to cross check the data prior to mailing. It’s also probable that some businesses trade off-line and use marketplaces for disposal of distressed stock and may not have been fully disclosing their online sales.
This is just the start of the campaign and it’s still in it’s awareness stage. HMRC aren’t going to chase you before the 14th of June but time is running out if you are behind on your taxes and haven’t contacted them yet. From that date onwards expect them to start chasing down anyone that they wrote to that hasn’t taken the time to call them.
You may well have already mentioned this, but not all Business Sellers have been written to. I never received a letter, and I have sent in my tax return on time for the past six years. However, given what you have said, those two points are probably not linked 🙂
HMRC should really be chasing the sellers selling £0.99 items with 500,000+ feedbacks (let’s not name them, tamebay readers are intelligent enough). How on earth are those sellers making the money if they were to pay their correct taxes? Further, eBay would never want to disclose the information of such accounts as they neither want to loose business via eBay NOR PAYPAL!
If it wasn’t for the BIG sellers evading taxes, eBay would of never grown! Remember the story of bobob_uk that ebay closed? Well, the account is back in business.
I bought a PC cable for 99p all in 1st class a couple of months ago, from a seller with hundreds of thousand feedback.
Now, even with OBA, the cost [was] 55p 1st class + say 5p packing/printing [not including labour] + .099p ebay fees + .235p paypal fees + Cost of item.
Looks to me that the HMRC owes them Money….!!
Selling .99p items on eBay could really mean a lot of things. One of them is how it could be a seller’s long term strategy to get to the top of Best Match or that they are a volume seller. One can never tell how cheap items can be when bought in bulk.
We’ve been talking about it for sometime at TWF and one of our members wrote a great piece about it. Here’s the page if anyone’s interested – thewholesaleforums.co.uk/threads/how-why-sellers-sell-for-99p-on-ebay.152698/
Good article on TWF, but the writer forgot to mention that some BIG eBay sellers evade tax as part of their selling strategy.
Cast the first stone ?
DVLA will be sending a letter to every owner of a high powered car asking them to to admit to speeding next
The way my eBay account is set up and the way my PayPal account is set up I can state 100% sure that the Data was from PayPal. They used my full company reg Name (only on PayPal) and only add during the recent PayPal updating their information and posted to the return address on PayPal not the registered business address of the Ltd company.
If you don’t mind me asking, what kind of sales volume did you have?
Over the past 4 years or so I have had roughly 350 – 400 transactions via paypal (not all via Ebay)
Maybe 2000 (ish) per year selling off old equipment of mine. I am in the process of working out how much profit (if any) I have made
Sounds like its Paypal that’s handed over data on sellers turnover, number of sales or business info.
I thought hmrc requested 32500 sellers details from eBay and amazon, but they are saying they haven’t handed any over.
That could only leave PayPal
Mmm…Anyone else notice that by eBay using Paypal to pass on financial information about sellers, they protect non-EU – notably Chinese – vendors from scrutiny? The tax or VAT man cannot chase someone based in Hong Kong with Paypal data. Ebay have been clever in this regard, as they actively court Chinese sellers.
UK sellers cannot hope to legitimately compete with Chinese sellers, by paying tax and VAT on products in categories like electronics. This action by Paypal will help rid eBay of even more British sellers so that the Chinese can have a free run.
Going off on a tangent, I know someone who use to post on here with a link to their website. They have tracking software on their site which shows them where visitors originate from. Invariably they’d have visitors from China perusing their site within hours of commenting – I’m guessing to see what products they can add to their eBay wares.
Ultimately, HMRC, have a great weapon they fail to use properly.
It’s called import duty/VAT, where they ‘could’ gather many 100,000£, but fail to stop non EU sellers paying their dues on imported goods via post @ Heathrow.
I can’t find anything concrete online about this though…It looks like it is Paypal, but I can’t be sure.
I’m sure I read that they don’t pass on customer details to Tax authorities but HMRC may be flexing muscles and requesting data over a certain threshold.
Perhaps Tamebay can assist with some detective work? 🙂
If it’s not Ebay or Amazon, I don’t think HMRC would just browse the websites looking for the main players? That seems rather inneficient
From Paypal.co.uk’s T&C’s:
Specifically, you consent to and direct PayPal to do any and all of the following:
a.Disclose information including, without limitation, transaction information, account information, personal information and the contents of communications to: the police; security forces; competent governmental, intergovernmental or supranational bodies; competent agencies (other than tax related authorities),
Note the “Other than tax related authorities” section
Those disclosure terms only apply in cases of fraud as it continues “and other third parties that we in good faith believe it is appropriate for us to cooperate with in investigations of fraud or other illegal activity or potential illegal activity”
In 2008 new rules were introduced in the Finance Act 2008, specifically Schedule 36. And Schedule 36 FA 2008 gives HMRC some fairly hefty powers to request information. The law states:
“An officer of Revenue and Customs may by notice in writing require a person
(a) to provide information, or
(b) to produce a document,
if the information or document is reasonably required by the officer for the purpose of checking the tax position of another person whose identity is known to the officer (the taxpayer).”
Strictly speaking HMRC should get consent from the taxpayer first (known as an informal request), but they don’t always have to. Their own manuals of best practice state the following:
“We may need extra information or to carry out an inspection in order to check a person’s tax position. The vast majority of people co-operate with our requests…However, we are not obliged to make an informal request. We may decide to use our legal powers straight away where we have good reason to believe it will be more effective or efficient to do so. For example, we might not make an informal request where there is a history of non-cooperation or where tax evasion is a feature of the case.
We might also not make an informal request to obtain information from third parties, even where a person is co-operating fully and tax evasion is not suspected. This may be because …there is no informal way of obtaining the information. For example, there may be confidentiality or Data Protection issues for the third party.”
So even if you have done nothing wrong, or are not suspected of doing anything wrong, HMRC can ‘formally request’ information on your Paypal account. And Paypal will tell them everything.
strikes me as inefficient HMRC sending a letter suspecting they may be trading online, to a company that trades online only and accepts paypal only, with accounts submitted
There is very little ‘cash pound notes’ trades online, as most of it, if not 99% is traceable via credit card/online portals, like Paypal & thus credited via UK Bank accounts, so I do not understand why HMRC think everyones at it.
Our accountant makes us account for every credit inwards. .
I think there will be allot more follow up letters than initial campaign letters being sent out after the 14th.
I am going to declare my sales and profit (if any, once I work things out) via the website