eBay traders in taxman's sights

Following the recent news that 'Over 50,000 Britons earning income from online auctions’, it will come as no surprise that the Inland Revenue has been watching the growth of ebay small businesses with great interest!

Andrew Watt, Director of Tax Investigations at Chiltern plc, said in a recent press release:

“Sellers on eBay are being encouraged to stock up on top selling items such as the latest computerised gadget from Japan, BowLingual, the dog translator, Playstations and iPods, with the suggestion that they can make a substantial profit over the Christmas selling period. HMRC is said to be using the number of ‘feedbacks’ a user has to determine which individuals are ‘traders’ and are ripe for investigation. Once these and other traders have been identified by HMRC there is likely to be a sudden surge of investigations.

Many innocent individuals may not realise that what they thought was a hobby is actually deemed to be a trade, and that potentially there will be tax, interest and penalties to pay.

eBay traders who are unregistered with the UK tax authorities, and who have not declared their eBay income, or are in any doubt about whether they should have paid tax in the past should take professional advice immediately, particularly as voluntary disclosure will help to reduce penalties that HMRC are likely to levy.”

If you are in any doubt over your tax liabilties from running an ebay business, why not read our eBay Accounting and Tax Tips and keep the taxman at bay?