HMRC chase smaller online seller’s unpaid tax
The Telegraph reports that not only are HMRC chasing more online sellers to ensure that they’re paying the correct tax, but that they are also actively looking for a high profile offender who’s failed to declare their income to make an example of.
It’s not just eBay, although that’s probably the most popular site for online sellers due to the ease of getting started, but also Amazon, Etsy and Gumtree sellers are under the spotlight.
The Telegraph reports seeing a letter sent to an eBay seller saying “HMRC receives information about fees paid by you from the e‑marketplaces you use and is aware you were registered as a business seller. HMRC thinks you should have declared more on your tax returns than you did“. In other words they already know your rough turnover from your eBay fess and if you’ve not declared what they consider a reasonable turnover, expenses and profits they’re chasing your heels.
It doesn’t matter how little profit you made, even if it’s only £100 a year you must declare it. In fact if after expenses you made a loss you might even be able to offset the loss against taxes paid from other sources such as a regular salary!
If of course you’ve registered as a business seller than it’s pretty obvious you’re trading and need to declare your income and expenses. If you don’t it’s simply asking for an investigation by HMRC and they could force you to pay up what they estimate you owe until you correctly complete your tax returns, plus of course anything up to £1600 per year in fines for late submission.
If you, or someone you know, thinks that they’ve some income that they should have declared, it’s much better to give HMRC a call and fess up before they come calling. They’ll still want the tax paid, but they’ll look on your case a lot more favourably if you go to them than if you wait until they catch you.
It has been mentioned before about much larger Chinese sellers either evading VAT from abroad or via UK Fulfilment houses.
Reports of such much larger VAT evasion have been sent to HMRC. I have received a reply from Lin Homer (Head of HMRC) prior to the election stating they are now looking into this matter also.
One can only hope that all parties (large and small) who evade VAT and tax will eventually be caught do to the more sophisticated techniques of Tax authorities across Europe.
This again is typical, they are going for the low hanging fruit. A seller who has registered as a business and suspected as under paying tax. When they should be going after the fulfilment centre fraud which is a huge problem and destroying opportunities for those that do pay at least VAT.
Yes – fulfilment centres are complicit in this fraud. Especially with none EU sellers.
UK Fulfilment centres and shipping agents should be made jointly liable for sellers unpaid VAT liabilities and import duties; similar to VAT Notice 726: joint and several liability for unpaid VAT.
This would stop them in their tracks…
Good – find them and fine them :)
If they were serious about this they could try and do something about the millions of parcels that arrive into the UK from China which are marked as Gift.
Interesting, and about time.
Unsure what they mean regarding £100 profit though…
Is that after they hit the personal tax threshold, or if they make £100 on a sale?
>> Unsure what they mean regarding £100 profit though…
I think Chris was just using that figure as an example to demonstrate any sized seller is liable
Sorry, I should have mentioned that the Telegraph article states that HMRC are going after sellers who have made as little as £100.
Sounds like a waste of time to me :)
I’m all for paying any tax owed, but chasing these kind of amounts seems a little bit insignificant given the well known companys who are avoiding tax…
IIt’s very likely that the cost of chasing an ebay Trader making just £100 per annum will be considerably more than and Tax and penalties that HMRC obtains.
Even chasing those with £1,000 or oven £5,000 is likely to be a total waste of time and effort.
But what about the Chinese and other Foreign Sellers who claim to be based in the UK. Their annual turnover could be in the millions and they deserve to be targeted.
Fear factor does anyone actually know of anyone that has been prosecuted ? its a low cost progam to nudge the nieve basically honest and decent into coughing up
The real naughty ones will take a bit more effort
We received one of those warning letters some time ago from hmrc saying that they had noticed we sell on line and its possible we may need to pay tax,
Were a vat registered limited company trading on line for years ,
we would be very surprised if we did not Have tax to pay
I don’t understand why HMRC are having any problem finding a high profile seller to “make an example of”. I can think of two right under their noses – eBay and Amazon!
Surely they’ve heard of them?
Long live The Revolution!! :)
Chinese sellers are wrecking UK businesses on ebay. How does the scam work? Simple! Get a UK address (there are warehouses dedicated to drop shifting Chinese goods – or use a family member in the UK), send the goods with a false customs value so import duty and VAT can be avoided or minimised to a fraction of the true value. Ebay shops take the orders, send the shipping request to the warehouse, item is sent to the customer. The customers money is already in China, no income tax is ever paid and no VAT!! This equates to an undercut of approximately 30%. So the hard pressed British economy is robbed of more TAX and VAT and subsequently all us legit sellers have to pay more in taxes whilst getting kicked in the head by China. It’s impossible to compete unless your offering unique products not readily available. Something must be done but it won’t be. HMRC couldn’t give a monkey, they just concentrate on soft easy targets.