PayPal and HMRC

LakiCG

Hello,

I understand that income made by using PayPal is taxable doesn't matter if money has been withdrawn to a bank account or not and have to be declared as well as the payments received into a bank account. Otherwise it will be treated as a tax evasion if disclosed by a tax authority.

But does anyone know if PayPal reports HMRC about the trading activities that have happened through its accounts (especially business PP acounts)?
If so, does PP report HMRC about every each trading activity and receiving money or they only do it on the request made by the tax authority?

Thank you for answering.

Randvegeta

I really doubt they do. Besides, even with a business account, how is anyone to know if the purpose of your Paypal account is for business or personal use. It does not take into consideration any of your costs so it cannot possibly know what your income (profit) is. And since it is your income (profit) that is taxible, I can hardly see why Paypal would share this information, and why HMRC would even want it.

antrobus

As far as we're concerned here in the UK, 'Paypal' is simply a service offered by PayPal (Europe) S.à r.l. & Cie, S.C.A. which is a bank based in Luxembourg, and thus a Paypal account is a bank account. Paypal will not report any "trading activities that have happened through its accounts" to HMRC, but then neither will Barclays, Santander, HSBC etc etc So from the point of view of reporting or not reporting trading income to HMRC it makes no difference whether or not that income was received in a Paypal account or a Barclays account, you're neither more nor less likely to get away with tax evasion.

chrismac1

True, subject to the exception that any "suspicious" transactions which are potentially moneylaundering must be reported to the authorities immediately.

MacMickster

I would be amazed if HMRC were not very interested in e-commerce.

In the same way that they have managed to obtain details of balances in bank accounts in various tax havens over the years, I am sure that they will try to get details of PayPal accounts.

SeniorSam

I would have thought that Paypal would be more interested in the vast amount of buyers and sellers who CHEAT the system by using Paypal as Paypal GIFT, when it is just a normal sale or purchase. Most people selling ask for Paypal gift but aren't Paypal missing out on this, or do they just turn a 'blind eye' to those transactions?

Sam?

Randvegeta

SeniorSam wrote: »

I would have thought that Paypal would be more interested in the vast amount of buyers and sellers who CHEAT the system by using Paypal as Paypal GIFT, when it is just a normal sale or purchase. Most people selling ask for Paypal gift but aren't Paypal missing out on this, or do they just turn a 'blind eye' to those transactions?

Sam?

The Paypal GIFT function is not desirable for buyers for commercial transactions.

With a gift, cannot claim if the good/service is not provided, so you won't be able to get a refund. Overseas gift transactions are not free either (though cheaper than the normal fee).

Merchants cant do partial refunds of gifted transactions either.

So proper commerce should not be able to exploit this little service.

LakiCG

I have read that there is a turnover threshold of £7,000. If exceeded PayPal will report a tax authority.

Does anyone know what about very small amount of money that have gone through PayPal business account?

I think that PayPal doesn't send anything to HMRC in this case (if we talk about a small amount of money the money laundering can be excluded as a possibility). As far as I know you could be asked by HMRC to submit a report about PayPal transactions regardless your turnover. But can someone confirm if this always happens for PayPal business account holders or only in the case of money laundering suspicious?

bugged

They generally don't share information with the UK tax people; as a Luxembourg entity they don't need to.

They do in the US with the IRS though. The IRS has bigger teeth then the UK Revenue though.

Cook_County

bugged wrote: »

They generally don't share information with the UK tax people; as a Luxembourg entity they don't need to.

They do in the US with the IRS though. The IRS has bigger teeth then the UK Revenue though.

Thankfully the IRS share many hundreds of thousands of pieces of data with HMRC daily.

Randvegeta

Cook_County wrote: »

Thankfully the IRS share many hundreds of thousands of pieces of data with HMRC daily.

Thankfully?