PayPal and HMRC

browneyedbazzi

OP - Posting this sort of question would make it seem that you may be avoiding tax on your paypal earnings. This is a public forum and I would be shocked if HMRC didn't have someone who keeps an eye out for such posts...whether they routinely get info sent to them by paypal is irrelevant now because they will be requesting detailed information about you.

antrobus

browneyedbazzi wrote: »

OP - Posting this sort of question would make it seem that you may be avoiding tax on your paypal earnings....

No, we're not talking about avoiding tax (which is perfectly legitimate, of course), we're talking about tax evasion pure and simple.

LakiCG wrote: »

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?

You appear to be worried that Paypal will send a report to HMRC alerting them to the fact that the actual turnover of your business is higher than that which you have declared. As far as I'm aware, Paypal will do no such thing, unless obliged to do so by the Luxembourg authorities, which is pretty unlikely. So I wouldn't worry about that. What I would worry about is the fact that HMRC aren't stupid and have ways and means of finding things out.

You haven't identified the source of your Paypal turnover. But let's say it's from sales on eBay. There is apparently a nifty little data feed supplied by a company called Terapeak that enables you to identify the turnover of any eBay user. So all HMRC need to do is pay the monthly subscription and off they go.

As far as tax evasion for the Average Joe is concerned, the golden rule is this; always declare income to HMRC where a third party has a record of the transaction.

Cook_County

Randvegeta wrote: »

Thankfully?

Correct - HMRC are required to collect tax. You have a British passport, if you do not like the UK tax regime you have a democratic right (some would say duty) to exercise that right to change the system through our constitutional system.

Randvegeta

Well, I do not support, condone, or participate in tax evasion. So I would agree that the OP should simply pay whatever is due.

However, paypal transactions, regardless of weather or not they are personal or business accounts, can be used for personal reasons. If selling your second hand goods on E-Bay generates some revenue (assuming the goods were not purchased with the intention to sell for a profit later), then this really should be untaxable. And remember, only your gains are taxable in this circumstance, so if you sell at a loss, its never taxable.

Buy £100k worth of goods over many many year, sell them all in 1 year for £50k, is this taxable? I wouldn't imagine so. Paypal can report these earnings if they like but it doesn't paint the perfect picture.

That being said, it does sound like the OP simply wants to EVADE taxes.

Bob_the_Saver

Taxman targeting eBay sellers

http://www.simplybusiness.co.uk/knowledge/articles/2011/06/2011-06-23-taxman-targeting-ebay-sellers-what-you-need-to-do/

soolin

I don't believe it is paypal you need to worry about if you are not declaring earned income, it is friends and relatives.

As a side effect of some voluntary work I was doing I had a number of people approach me about being investigated by either HMRC or DWP and asking about procedure . In all cases those people knew or believed they knew who turned them in, some even had relatives or friends approach them later and say sorry for doing it. The worst case I heard about was a young woman turned in by a close relative who was likely to get into a great deal of trouble, she was already being interviewed under caution about benefit fraud when I last spoke to her. I might not be talking about huge numbers here in the great scheme of things, but I am talking several a week in a very small geographic area and if that is a sample of what the rest of the country is like then the numbers being caught must be quite large.

Randvegeta

soolin wrote: »

I don't believe it is paypal you need to worry about if you are not declaring earned income, it is friends and relatives.

As a side effect of some voluntary work I was doing I had a number of people approach me about being investigated by either HMRC or DWP and asking about procedure . In all cases those people knew or believed they knew who turned them in, some even had relatives or friends approach them later and say sorry for doing it. The worst case I heard about was a young woman turned in by a close relative who was likely to get into a great deal of trouble, she was already being interviewed under caution about benefit fraud when I last spoke to her. I might not be talking about huge numbers here in the great scheme of things, but I am talking several a week in a very small geographic area and if that is a sample of what the rest of the country is like then the numbers being caught must be quite large.

Good on them. Tax evasion is a no no. Particularly for those who also receive benefits!