Made £100 profit on eBay? Then you may hear from the taxman
THOUSANDS of people who make as little as £100 profit selling goods online have been targeted by the taxman.
Websites such as eBay, Etsy and Gumtree have been forced to surrender account details for tens of thousands of customers to HM Revenue and Customs as part of a crackdown on tax evasion.
The ‘ marketplace’ websites have been ordered to hand over sellers’ names, email addresses – and even details of what they have sold.
Some 14,000 letters have been sent to vendors since 2012, warning that their online activity suggests they are running a business and may owe tax.
But the campaign could risk hitting people who consider their activity to be a hobby rather than a business, experts have warned.
Millions of Britons sell homemade goods or unwanted items online, but the point at which this is classed as a ‘ trade’ by the taxman can be a fine line.
Collectors who buy and sell goods within a short space of time, or people who make and sell crafts, could f i nd t hemselves cl assed as a business.
Dawn Register, a tax specialist at accountancy firm BDO, said: ‘Few people consider the tax i mplications of selling items online and may think it is just a hobby. Getting it wrong could i nvolve paying back taxes, late payment interest and penalties to HMRC.’
Chas Roy- Chowdhury, of the Association of Chartered Certified Accountants, added that HMRC must pursue people ‘sensitively’ and ensure they are not wrongly accusing ordinary sellers of making a profit.
He said: ‘A lot of people on eBay sell second-hand goods, which will actually make a loss. For example, a bike which they bought for £100 and are selling for £50, or clothes which have lost value.’
The taxman will consider whether the seller’s primary motive is to make a profit and whether they acquired the items they are selling as a gift.
They will also look at whether an item has been modified to make more profit, and the scale on which someone is selling goods.
Any earnings above the personal allowance of £10,600 are subject to tax i f they are regarded as profit made from a business.
But the Sunday Telegraph claimed that some sellers were being targeted after making as little as £100.
Around 13,000 of the letters issued by HMRC since 2012 have warned people that their online activity suggests they are running a ‘trade’, and have offered reduced penalties if they come forward with details of their profits.
Another 1,000 have specifically identified a shortfall on people’s se l f - assessment forms.
Under controversial rules introduced last year, HMRC can demand this disputed tax upfront, even before an appeal has been heard.
Around £9million has been raised in tax as a direct result of the clampdown on emarketplace sellers in the past three years.
One seller has even been jailed. EBay trader John Woolfenden was given a twoyear sentence after he failed to pay almost £300,000 in tax on £1.4million worth of sales from selling DVDs and games.
A spokesman for HMRC said: ‘Anyone just selling the occasional item has nothing to worry about.
‘Getting it wrong may mean paying’