02.06.15 HMRC Targets eBay Sellers

Thousands of online sellers who use websites such as eBay, Etsy, Amazon and Gumtree are the focus of a HM Revenue and Customs (HMRC) initiative to crack down on tax evasion.

As part of HMRC’s extensive new powers introduced last year, such websites are being told to hand over customers’ account details, including their selling activity. Using this information HMRC have been able to target 14,000 individuals it suspects of failing to declare profits on their self-assessment tax returns.

This follows a campaign that ended in 2012 to warn sellers that although selling on eBay may be their ‘hobby’ – tax might be due as long as their activity is classed as “trade.”

One high profile case involved an eBayer who turned over an undeclared £1.4m in six years who, as a result, received a two year prison sentence. He had failed to pay almost £300,000 in tax on his DVD and games business.

People who register their account as a “business seller” on websites such as eBay or Amazon are among the likely targets. HMRC will consider whether the seller’s primary motive is to make a profit, whether an item has been modified to make more profit and the scale on which someone is selling goods.

People selling the occasional item do not need to worry, however online traders need to ensure they are paying the correct tax.