Telegraph: New eBay & PayPal tax crackdown
The front page of the Daily Telegraph will on Saturday carry a story about HMRC’s impending crackdown on eBay sellers in addition to smartphone app stores run by Apple and Google, holiday lettings sites and a raft of other online retail sites.
According to the article HMRC will be given new powers grab details of millions of online transaction en masse to target those who don’t declare their income from online selling.
The aim is to target businesses, although from previous HMRC fishing expeditions they’ve shown a remarkable ability to target businesses displaying their details online but a complete inability to compare the business credentials against company or personal tax returns. What HMRC haven’t demonstrated is an ability to target those masquerading as private sellers who actually are operating as a business and that’s where the biggest returns are likely to be.
Of course currently companies like eBay and Amazon have been very reluctant to hand their databases over in their entirety, although they’re more than willing to supply any individual record on request by the authorities. I would imagine that such proprietary information is the last thing these companies would want to hand over. Let’s not forget HMRC are the people who a few years back carelessly lost a couple of password protected CDs with the details of every child in the country along with their parents or carers personal data. It’s only last month concerns over tax payer privacy were raised over HMRC starting to use cloud based services from Google.
Aside from data loss concerns from the marketplaces, ultimately you’ve nothing to worry about if you declare and pay all your tax that’s due. If you rent a room out on Airbnb, make a living driving for Uber, sell from your website taking payments with PayPal or have written an App and earn from Apple or Google, all you have to do is to make sure you declare your income.
Finally a note to The Telegraph
“Paypal, the online payment company owned by Ebay“… did you miss the news that PayPal is now a separate company. Also after 20 years it’s time to realise eBay is spelt with a lower case e and capital B.
I can’t believe that nobody has mentioned Chinese sellers yet. This post has been live for half an hour.
What about the Chinese sellers evading tax and VAT. :-)
Those above board business sellers paying their dues properly have nothing to worry about. As for the tax dodgers and those pretending not to be a business when they clearly are I have no sympathy for, I hope HMRC come down on you like a ton of bricks..
The big ones already got a ton of bricks, via a buy to let piggy bank in london.
Couldn’t agree more Richard. Declare what you earn and pay the tax. Pretty simple really. In reality not too sure how Ivan the taxman is going to collect unpaid tax. I suspect it’s going to be more than just a handful of sellers.
ebay, no longer eBay
ebay for logo, yet eBay still company name and all sub sites. (see top/bottom of UK home page – typical really!!)
tHMRC have stated recently that they are targeting on-line sellers who are avoiding vat but the biggest loss to HMRC and unfair competition to UK based businesses is the e-bay sellers shipping out of Hong Kong,the king of these is xxxxxxxxxx.
Selling out of Hong Kong is so lucrative that we should all be doing it.
These companies have the advantage that they can post items from HK to UK for as little as 20p,the same item would cost £2 plus using Royal Mail parcels.
This all is possible because of the UPU,universal postal union,which states that all mail sent from abroad will be distributed by the receiving country for free…this has resulted in Royal Mail establishing a 2000 staffed warehouse near Heathrow,handling 7 jumbo cargo planes of product per day,mostly from Hong Kong and all being delivered by our postman for free,Royal Mail are embarrassed about it but won’t talk about it….it can be stopped immediately by forcing HK parcel service to put the same price on parcels from HK as we charge London to HK,a fair price would be £3.80
HMRC have a filter known as LVCR,low value consignment relief,this means they don’t collect the duty or vat on any parcel value less than £15.00….these Chinese sellers never include an invoice so they can lie about the value,even £50 items can be valued less then £15. If HMRC started to try to to collect the vat it would cause such a logjam that the unfair trade would stop immediately,PayPal would have thousands of charge backs.
So the unfair trade is effectively caused by complicity by Royal Mail and HMRC,remember that the next time Royal Mail say parcel rates have to increase or our government says it is cracking done on tax avoidance.
**Edited by admin to remove company name**
If bored shopping for brick brac I don’t really need. Since this year I only buy from Chinese sellers for this very reason.
Why pay for shipping on these purchases when royal mail are willing to do it for free. It makes a lot of difference on a 5 quid tshirt (normally fake). As it’s brick brac I don’t care when it arrives.
Where did you hear this?
Very interesting comment !
Furthermore, it is interesting how it is cheaper for me to send a 200g Packet to New York via RM Max Sort (£1.02) (Or £1.76 to Australia!) … than it is to send a 200g Packet to Manchester! via RM 48 (£1.92)
I guess it works both ways.
I did a bit of googling and it appears Australia Post have been moaning about the exact same problem….
Get this every year from HMRC and every year it just gets worse. If i was avoiding tax, I wouldn’t be worried. Because same old, same old.
Cheap and easy way for hmrc to panic the basically honest to register or pay ,the courts could not cope if they prosecuted everyone who evaded tax
Looks positive to me. BBC have just published this:
Detailing HMRC consultation document “Tackling the hidden economy: Extension of data gathering powers” that HMRC equate to £5.9bn a year in tax.”
Stating “HMRC stressed it would not target individuals who sold personal possessions, only businesses that failed to pay tax owed.”
Also Andrew Pierce of LBC radio did a 30 minute phone in about HMRC powers and eBay sellers.
I managed to get on air and discuss VAT fraud and how Chinese are taking over.
Unfortunately its not on catchup – you need t subscribe to it.
Andrew Pierce – THE WHOLE SHOW – 25.07.15
Its the last half hour…
Good one for phoning up.
But this taxing online sellers ( the real fraudsters) is a bit like the housepricecrash thing if any one read HPC, youll know they been yapping on about it since 2005. Recently the the land lord pushing out first time buyers we are gonna sort it thing.
People have been dodging tax on ebay UK since the day it opened.
THESE ARE All unicorns…
Well done, I caught your contribution and you were very good. I was in the car and wasn’t able to get through myself.
Thank you for the insight. It is getting harder and harder for smaller sellers to make some side income on eBay.
Keep up the great information.
Life’s Baggage. Everyone has it, it’s how you carry it that defines you.
So easy for any government to gain revenue simply add a percentage to ebay amazon et als fees
Wasn’t this tax thing shorted then? Pathetic. Guess they got busy doing something else in the mean time.
All HMRC are good for is harassing people who actually do pay tax.
If we you were a business trying to hide profit and attempting to avoid tax the last thing to do is sell on line , so we cant understand what hmrc are prattling about its joe soap moonlighting that they will catch with online data
What journalists (this includes Tamebay, BBC, Telegraph, LBC, etc) always fail to do is use ‘logic’ when looking at tax evasion and eBay/Paypal/Amazon.
They ALWAYS approach it from the angle that HMRC have to obtain data from eBay/Amazon.
This is simply a nonsense.
There are two sides to a payment from Paypal, 1. The release of funds from Paypal, and 2. The receipt of funds by a UK bank.
ALL of the funds that HMRC are interested in (if we ignore Chinese fulfillment centres) are received by UK banks.
HMRC have always had the ability to demand that UK banks supply a list of people who have received Paypal payments. This is electronic data that would probably fit on a single DVD in CSV format. HMRC could apply their own filters on this so that they exclude annual receipts of less than £1000 (people clearing out old stuff from the attic), and annual receipts of over £100,000 (which will be businesses who will almost certainly be registered).
Those annual payments between £1000 and £100,000 can then be checked against tax returns.
I used to work for HMRC in the 1980s and we used to receive details of bank interest in this way from the banks, on large rolls of paper which were then physically cut up with scissors, before being sent to local tax districts. These days it would be far simpler.
I think that these press releases from HMRC are just scare tactics. They already have the capability of obtaining the information and if they aren’t already undertaking such reviews, then they flaming well should be.
I sometimes fear that HMRC haven’t realised that they can interrogate the banks, and that HMRC themselves obsess about how they can get the information from eBay without realising that they don’t even need to.
Re your comment “There are two sides to a payment from Paypal, 1. The release of funds from Paypal, and 2. The receipt of funds by a UK bank.” you miss one thing….
It’s quite possibly nowadays not to deposit the funds into a bank account. For instance many traders will pay their suppliers (including couriers) with PayPal so much of the money will never hit a bank account (UK or otherwise).
Additionally I have a PayPal debit card which means I can literally spend any money in PayPal on absolutely anything I want in the UK or abroad anywhere that accepts Mastercard.
Plus of course you can spend on websites and pay with PayPal.
That means a business with a sizeable turnover could potentially have very small withdrawals to a bank account (or none at all) which is why HMRC want to have access to view online emoney systems such as PayPal in the same way that they treat bank accounts.
Indeed, but they aren’t trying to get 100% of evaders. Your scenario is that of a criminal attempt to hide money (because of the number of steps involved), rather than straightforward ‘failure to disclose’. As a result, it would attract higher penalties from HMRC if discovered (70-100% rather than 20-30%). In addition, assuming that this is a business using an accountant, the accountant would be obliged to report the crime without advising the client. (An accountant in that position faces jail, personally, for not reporting money laundering – which is what it is).
Using the 20/80 rule, HMRC could probably recover 80% of evaded revenue from just 20% of evaders. They are not embarking on a task to find ALL evaders, but merely to efficiently obtain tax on a vast area of undeclared income.
The point about HMRC trawls is that 90% of money is obtained by self-disclosure, 9% is obtained by HMRC investigations, 0.99% is recovered on the steps of the criminal court, and 0.01% results in Porridge.
And of course the data never goes out of date and they have at least 6 years, and up to 20 years in serious cases, to use the data to recover funds (with interest and penalties).
When i started my business HMRC were described to me as a holy vulture that would swoop from the heavens removing me of all my possessions and throw me out on the road in only my underwear, if i didnt comply with being a good citizen.
This may have been the case in 1959, but in modern times HRMC are pathetic and inadequate. You can see tax avoidance on a massive scale by simply typing ‘iphone cover’ on ebay. Nothing more and nothing less, not only does this need to pointed out to them like they are part of the ‘special’ group that need there own ‘special’ teacher but they do nothing about it.
These measures are more likely to target people already under paying tax, rather than those paying nothing.
Again it will be those paying Tax be it incorrectly being punished than those paying None at all.
HMRC are just a big joke. Still the likes of Amazon run rings around them.
I got the generic warning message from HMRC some time ago about my eBay selling account and I’m not even a resident there, and do not pay UK taxes.
When they put these stories in the tabloids they’re hoping to scare any tax-dodging sellers into coughing up.
I would imagine it would be a case of sellers being forced to register as businesses at a much lower threshold as the current level…
PayPal would do the same, then inform Hmrc of the sellers details and profits etc
I think that’s what the IRS did in America, Sellers were forced to register after a certain number of transactions and the IRS was informed of their profits etc
I wonder if Hmrc will go after historic data, or if it will be new measures going forward.
Time will tell
Is just not viable to go after everone that owes tax it would be like trying to prosecute everyone who speeds or smokes weed
If I had a pound for every time the HMRC was “swooping” on ebay sellers I would be able to pay my taxes! :-p
So sad l, tax fraud has become so prevalent. People now mock HMRC and see right through this propaganda.
The last comment on the Telegraph article from an eBay spokesman made me laugh:
“It is important that anyone selling professionally on eBay operates in compliance with the law. If you are just selling unwanted items for spare cash, then you may not need to worry about tax. If you are buying or selling an item with a view to making a profit, then you may be liable to pay tax on any profits you make and you may need to account for VAT on your activity.”