Ebay traders under HMRC tax spotlight

HMRC’s ongoing tax dodging crackdown targets regular eBay traders and those who buy items to sell them on at a profit

If you are a regular eBay trader and haven’t been declaring your income, you may be in for an unpleasant surprise.

As part of its ongoing crackdown on tax dodging, HM Revenue & Customs (HMRC) has written to 32,500 people who it believes are regularly trading online and may not have paid all the tax they owe.

The letters, which should start landing on doormats on 2 May, give people the chance to pay up now and benefit from reduced penalties. If they fail to come forward, and HMRC has evidence they have not paid the right amount of tax, they will be hit with much higher penalties and could potentially face criminal proceedings.

Ebay traders are the latest group to be targeted by HMRC, which has previously had in its sights plumbers, doctors, dentists, home tutors, market stall holders, car salespeople and those with money offshore.

A spokesman said this latest campaign wasn’t aimed at people who occasionally sell a few personal items in order to raise some extra cash. They are unlikely to need to pay tax as they aren’t trading.

But if you regularly sell goods or services “you are almost certainly trading”. That is likely to include people who buy items in order to sell them on at a profit.

The spokesman added: “Most e-traders pay what they owe. However, there is a significant minority not paying all that they should, and we are encouraging those people to come forward now, get their tax affairs straight, and benefit from the best possible terms.”

Those who fail to come forward by the 14 June deadline outlined in the letter face a penalty of between 40% and 100% of the tax due, as opposed to just 10% or 20% if they put things right now.

“We want to make sure that in the future all e-marketplace sellers will know what they need to do to keep their tax affairs in order,” said HMRC, which announced in February that 30 taskforces intended to tackle tax evasion would be launched in 2012-13.

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