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There are just two months left of a three month amnesty for those who make money through online auction sites to come clean.
HMRC is set to crack down on traders operating through e-Bay and similar sites who fail to declare their income. The tax authority has given online marketplace sellers three months to come forward and a further three months to arrange full payment of tax due, including interest and penalties.
Peterborough accountancy firm Rawlinsons is warning prolific users of e-Bay to ensure they declare their interest to avoid facing penalties – or even a criminal investigation.
“HMRC is holding what it calls an ‘e-Markets Disclosure Facility’, otherwise known as an amnesty,” said Rawlinsons partner Ken Craig. “It’s an opportunity for those who effectively run a business through selling on e-Bay to declare it and then pay the tax they legitimately owe.”
HMRC has recruited extra staff and is promising to use the full force of its investigative powers to catch e-sellers who don’t declare their earnings for the sake of tax. Those caught will face penalties of up to 100% of the tax owed and could even be subjected to a criminal investigation.
“Those who use e-Bay to sell their own unwanted items won’t be affected,” said Ken. “The amnesty is particularly targeting online traders – those who use online marketplaces to buy and sell goods as a trade or business without mentioning it to the tax man.”
The amnesty started on March 14th and runs to June 14th. Those who arrange for full payment before September 14th this year will face a maximum penalty of no more than 10% of the tax owed – some will face no penalty.
“HMRC is using robot software to scan the internet for regular transactions so there won’t be anywhere to hide,” said Ken. “We’re working with clients to ensure those who need to register do so. There is some judgement involved when HMRC considers whether an online seller is trading or not so we would always suggest taking advice first.
“Generally those selling unwanted personal items now and then for less than £6,000 are fine. It is those who buy items with the intention of selling them on who could fall foul.”
For more information visit http://www.hmrc.gov.uk/campaigns/emarket.htm or for personal advice call Rawlinsons on 01733 568321.