People who sell goods online are being urged to seek advice on paying tax on their profits ahead of imminent crackdowns by HMRC.
Since September 2012 online trading sites, such as eBay and Amazon, have passed on tens of thousands of members details to HMRC following a large-scale crackdown on traders who have failed to register their income.
South Wales Chartered Certified Accountants Morgan Hemp & Company, are urging online traders to act quickly and register themselves for tax before the next stage of the HMRC crackdown where traders who have failed to seek advice and contact HMRC may stand to face a penalty of between 40 and 100 per cent of the tax due as opposed to 10 to 20 per cent if they seek advice and register with immediate effect.
Mark Robinson, Director and expert in online trading at Morgan, Hemp & Company said: “Many people sell the odd unwanted item or two online and in car boot sales, but the moment that revenue gained is then reinvested to purchase further items or materials for resale then the line of being an ‘online trader’ has been crossed.
“There are a considerable number of people who class what they are doing as merely a means to gaining a little extra ‘pocket money’ or just a hobby, but in fact they are operating as a trader and earning an income. These people are now being targeted in a string of crackdowns by HMRC, if they are not registered and not paying tax for their trading business.”
“HMRC are now using personal details from large online trading sites such as eBay, to target unregistered traders. HMRC will be able to see the volume and value of transactions made by an individual trader in a particular tax year and apply fines depending on the amount of tax owed since trading began, however traders who seek advice and register as soon as possible can avoid fines.”
“We would urge anyone who regularly trades online to seek expert advice on e-marketplace trading and taxing before it’s too late.”
eBay is the country’s largest online marketplace, with in excess of 14 million active users. Although around only 178,000 of these run a business or use eBay as their primary or secondary source of income, there are still many online traders who have not yet registered and are being investigated by HMRC.