Online sellers on alert as taxman comes calling

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HMRC is targeting the tax affairs of individuals selling via online marketplaces as part of its ever-growing assault on evasion.

Thousands of sellers who use websites such as eBay, Etsy, Amazon and Gumtree are now finding themselves under the microscope as the Revenue seeks to establish whether they are paying exactly what they owe. Thanks to sweeping new powers introduced last year, the taxman is able to download people’s account information and force them to pay levies that are disputed or subject to an inquiry.

Such powers have allowed HMRC to force websites to hand over their customers’ account details and selling activity – enabling the Revenue to target 14,000 individuals it suspects of failing to declare profits on their self-assessment tax returns. Of these, 1,000 people have already been identified as having a shortfall in their declarations.

Accountancy firm BDO claimed it has noticed a “significant increase” in letters being sent to clients who sold items online. It warned that those deemed to be evading their responsibilities would be “easy pickings” for the taxman.

Dawn Register, a tax specialist at BDO, said: “Few people consider the tax implications of selling items through eBay and Amazon, Gumtree and Etsy, and many think it is just a hobby. Getting it wrong could involve paying back taxes, late payment interest and penalties to HMRC.

“Clearly the Revenue is using information about volumes of sales, looking at your transactions, and using this to estimate your tax bill. You’re then in the hands of HMRC’s debt collectors.”

HMRC said it was investigating cases where “risks have been identified” or where traders need to be “educated” about their tax liability. A Revenue spokesman said: “Where people choose not to set the record straight, we conduct follow-up work. This includes investigations and prosecutions.”

The news comes after it was revealed that the Revenue has been snooping on individuals’ social media accounts in order to build an accurate picture of their lifestyle..

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