Benefits, ebay and HM Customs Compliance letter

verybadtimes

Please help.

My husband and I have been on benefits (IB, IS, HB & CTB) for the past 3 years. DH has depression and is under the care of a psychiatrist.

Yesterday we both received letters from HM Revenue and Customs Local Compliance department stating that they have information that we have other income that we are not declaring and should be submitting tax returns. The letter asks for information from 2005 including ebay ‘Trading Name’ and 'Trading Address'. We have a personal ebay account which coincidentally was opened in 2005 and have around 600 feedbacks from both sellers and buyers. Every item I have sold has been ours/our children’s that is no longer used or was never used. I can only assume that this is what they are looking into as we have not disposed of any assets (we don’t have any), neither have we been self employed.

I was under the impression that ebaying personal items is not taxable but buying items to sell for profit is. Is this still the case? Can anyone clarify the rules? I know I have nothing to hide as I have never bought to sell but have a huge knot in my stomach wondering what on earth is going on. I tried calling on Friday but the person dealing with our case is on leave and back on Tuesday. No one else could help apparently! We have been left to ‘stew’ over the weekend and my husband is taking it very badly.

Can anyone give me a little insight as to what might happen now? Has it happened to you? We were both working in 2005 but now we are on benefits. If we are obliged to complete tax returns surely this will be construed as benefit fraud? Should I consult anyone before telephoning again on Tuesday? I am crying as I type.

Please help if you can.

Bogof_Babe

It might be nothing to do with Ebay. As you were both working, did you get redundancy payments? Do you have savings accounts? A second property?

healy

verybadtimes wrote: »

Please help.

My husband and I have been on benefits (IB, IS, HB & CTB) for the past 3 years. DH has depression and is under the care of a psychiatrist.

Yesterday we both received letters from HM Revenue and Customs Local Compliance department stating that they have information that we have other income that we are not declaring and should be submitting tax returns. The letter asks for information from 2005 including ebay ‘Trading Name’ and 'Trading Address'. We have a personal ebay account which coincidentally was opened in 2005 and have around 600 feedbacks from both sellers and buyers. Every item I have sold has been ours/our children’s that is no longer used or was never used. I can only assume that this is what they are looking into as we have not disposed of any assets (we don’t have any), neither have we been self employed.

I was under the impression that ebaying personal items is not taxable but buying items to sell for profit is. Is this still the case? Can anyone clarify the rules? I know I have nothing to hide as I have never bought to sell but have a huge knot in my stomach wondering what on earth is going on. I tried calling on Friday but the person dealing with our case is on leave and back on Tuesday. No one else could help apparently! We have been left to ‘stew’ over the weekend and my husband is taking it very badly.

Can anyone give me a little insight as to what might happen now? Has it happened to you? We were both working in 2005 but now we are on benefits. If we are obliged to complete tax returns surely this will be construed as benefit fraud? Should I consult anyone before telephoning again on Tuesday? I am crying as I type.

Please help if you can.

The rules are still the same.

If you have not been running a business you have nothing to worry about, you just need to supply the information that HMRC have asked for.

ableandy

In general if you are purchasing products to sell at a profit you should be registering on eBay as a Business Seller and declaring to HMRC as self employed usually as a sole trader, keeping records and receipts and keeping 20% approx back for the 'TAX MAN'. It does not make a difference if you have another job working for a company whether that is part-time or full-time you are still legally allowed to be self employed as well although you employment contract may state you are not allowed to work for anyone else including being self employed.
HMRC use tests called badges to help identify trading as a business. The following "badges" are applicable to frequent eBayers who are enjoying an income online:

• Profit seeking motive - an intention to make a profit.
• A systematic number of transactions.
• Transactions are similar to those of an existing trade carried on by the seller.
• The asset is sold in a way typical of a trading organization.
• The asset is brought and sold within a quick space of time.
• The asset is purchased in order to resell it.

The fact that eBay’s listings are computerized means that HMRC should be able to get their hands on a rather useful audit trail for each seller. The seller’s problem may be that he has not kept decent records his end of the purchase price of the item and actual post and packing costs.

verybadtimes

Bogof_Babe wrote: »

It might be nothing to do with Ebay. As you were both working, did you get redundancy payments? Do you have savings accounts? A second property?

Thank you for your reply.

Neither of us were made redundant. I left work to have a baby and DH had to leave his job due to his illness. We don't have a property at all as we rent and have no savings. Ebay is the only item on the list of questions that we have been involved in.

verybadtimes

healy wrote: »

The rules are still the same.

If you have not been running a business you have nothing to worry about, you just need to supply the information that HMRC have asked for.

Thank you.

I keep telling myself this over and over and I will of course give them all the information they require but I still can't help myself worrying. I really wish the officer was in the office yesterday.

verybadtimes

ableandy wrote: »

In general if you are purchasing products to sell at a profit you should be registering on eBay as a Business Seller and declaring to HMRC as self employed usually as a sole trader, keeping records and receipts and keeping 20% approx back for the 'TAX MAN'. It does not make a difference if you have another job working for a company whether that is part-time or full-time you are still legally allowed to be self employed as well although you employment contract may state you are not allowed to work for anyone else including being self employed.
HMRC use tests called badges to help identify trading as a business. The following "badges" are applicable to frequent eBayers who are enjoying an income online:

• Profit seeking motive - an intention to make a profit.
• A systematic number of transactions.
• Transactions are similar to those of an existing trade carried on by the seller.
• The asset is sold in a way typical of a trading organization.
• The asset is brought and sold within a quick space of time.
• The asset is purchased in order to resell it.

The fact that eBay’s listings are computerized means that HMRC should be able to get their hands on a rather useful audit trail for each seller. The seller’s problem may be that he has not kept decent records his end of the purchase price of the item and actual post and packing costs.

Many thanks for your reply.

I have never purchased anything to deliberately sell on at a profit. Most items have been due to the merger of households when we married, baby related items as we are having no more children or old clothes.

I have not kept any details regarding any items nor postage costs as there was no reason for me to do so.

SuziQ

All I can say is that 600 items bought and sold seems rather a lot,but I suppose over a number of years you can explain that away.`Did you resell items you had purchased on ebay? Maybe they have looked into any of those and found you made a profit on the sale? I know a number of friends have done that and I doubt it ever occured to them (or me for that matter) that you had to pay tax on those.

johnwayne

Its not really that high a number especially as it is for items bought and sold over 5 yrs. You would only have to buy a couple of things a week to get up to that amount on buying alone.

I dont personally buy that much but can see how easily it could be done;)

How many of them were for buying and how many for selling?

missmontana

verybadtimes wrote: »

The letter asks for information from 2005 including ebay ‘Trading Name’ and 'Trading Address'. We have a personal ebay account which coincidentally was opened in 2005 and have around 600 feedbacks from both sellers and buyers. Every item I have sold has been ours/our children’s that is no longer used or was never used. I can only assume that this is what they are looking into as we have not disposed of any assets (we don’t have any), neither have we been self employed.
.

What else does it ask for?

digp

Are you talking about this HMRC: http://www.private-eye.co.uk/sections.php?section_link=in_the_back&issue=1255