New HMRC rules re sites automatically declaring income

soolin

It looks like there may be tweaks to the reporting system from next year with sites like eBay etc automatically reporting all income from users to HMRC. At the moment it is apparently only on request.

Obviously  this only affects people who receive more than £1000 per annum and can’t show it is private goods being sold only. However that’s less than £20 a week and includes all income including postage and with postage costs so high I imagine that covers a lot of small sellers maybe clearing an old collection, or just selling off u wanted clothes. A lot of these announcements never come to anything so it might not be worth worrying about, but truly private sellers might want to start taking some steps to enable them to show their goods are really unwanted personal items, would you be able to photograph an overstuffed wardrobe, or perhaps display cases in your home with your collection of snuff boxes or whatever! 

I did wonder how HMRC would cope, it’s very easy to regularly get £20 a week from eBay , realistically that could be as little as 2 unwanted items a week with postage included and article does say 

“HMRC has earmarked £36.69 million, including 24 full-time staff, to enforce this new measure.”

i really can’t see 24 staff managing the thousands of people this is likely to affect. 

https://www.thisismoney.co.uk/money/bills/article-12640869/Is-taxman-coming-hustle-Airbnb-Ebay-Uber-hand-income-data-directly-HMRC.html#:~:text=New%20regulations%20from%20January%201,start%20to%20be%20given%20automatically.

SimonFF

So, if I sell my £1001 guitar on Ebay, will I have to submit a self assessment?

GadgetGuru

Is this for business users only?
Surely selling used items from home etc cant be subject to income tax??

soolin

SimonFF said:

So, if I sell my £1001 guitar on Ebay, will I have to submit a self assessment?

No, as only businesses need to pay tax on sales. The new rules though mean your £1001 will be reported to HMRC , but will probably be ignored if it is obvious that you are a private seller.

soolin

IftiBashir said:

Is this for business users only?
Surely selling used items from home etc cant be subject to income tax??

Only businesses pay tax, the issue is that HMRC seem to want everything reported as I'm sure they are aware that there are lots of businesses using private accounts on ebay and on other sites there is often no way of identifying private sellers.

As per my post, it will be up to HMRC to decide who looks like a business and may need further investigation. In reality I suspect the case load will be too big to even make a dent in those unregistered businesses, but the threat remains that if someone is trading or making things to sell then they do run a risk of being caught at some point. If they are caught in the future then all investigations will be back dated, so just escaping this next tax year doesn't mean they might not face issues in future years.

RFW

soolin said:

IftiBashir said:

Is this for business users only?
Surely selling used items from home etc cant be subject to income tax??

Only businesses pay tax, the issue is that HMRC seem to want everything reported as I'm sure they are aware that there are lots of businesses using private accounts on ebay and on other sites there is often no way of identifying private sellers.

As per my post, it will be up to HMRC to decide who looks like a business and may need further investigation. In reality I suspect the case load will be too big to even make a dent in those unregistered businesses, but the threat remains that if someone is trading or making things to sell then they do run a risk of being caught at some point. If they are caught in the future then all investigations will be back dated, so just escaping this next tax year doesn't mean they might not face issues in future years.

I often see sellers, especially on Amazon, who should be VAT registered and aren't. As ever it's the government going after quantity over quality. The £36 million won't scratch the surface or even make its money back on small sellers. The biggest winners will probably be the accountants getting a few new clients.

soolin

RFW said:

soolin said:

IftiBashir said:

Is this for business users only?
Surely selling used items from home etc cant be subject to income tax??

Only businesses pay tax, the issue is that HMRC seem to want everything reported as I'm sure they are aware that there are lots of businesses using private accounts on ebay and on other sites there is often no way of identifying private sellers.

As per my post, it will be up to HMRC to decide who looks like a business and may need further investigation. In reality I suspect the case load will be too big to even make a dent in those unregistered businesses, but the threat remains that if someone is trading or making things to sell then they do run a risk of being caught at some point. If they are caught in the future then all investigations will be back dated, so just escaping this next tax year doesn't mean they might not face issues in future years.

I often see sellers, especially on Amazon, who should be VAT registered and aren't. As ever it's the government going after quantity over quality. The £36 million won't scratch the surface or even make its money back on small sellers. The biggest winners will probably be the accountants getting a few new clients.

I've mentioned before that I used to do some voluntary work and spent time talking with people who had been reported- although usually DWP (as it was) were the ones doing the investigation. Back then, which was a few years ago now, it was mainly sellers of clothing that were caught, the usual scenario was claiming benefits but running 2nd hand clothing sales on the side using a mix of ebay, car boots etc. Most were turned in by friends or family and it led to some real upsets - with the sellers desperately trying to work out how to explain why they sold every colour and every size of clothing and shoes all supposedly from their own wardrobes. I wonder what the 'hot' item is now for unregistered businesses.

There were mistakes as well, the dreaded letter arriving from DWP or occasionally HMRC asking whether they would like to reconsider their declared income- when perhaps they were selling off an extensive collection of something like perfume bottles or Steiff teddy bears- and the first recommendation was usually to find evidence of having had them as a collection for a while, perhaps a photo of a full display case in their spare room or shelves built especially for the bears.

I do agree though that HMRC can't possibly handle even a small percentage of people being reported through this new system , but it might make it a bit easier to see a pattern of sales and perhaps mark the file to investigate in future years. I refer to my earlier advice,, if anyone has any concerns about their personal selling history or are planning to sell off a large personal collection of anything, take photos and keep them, storage albums, display cases, overstuffed wardrobes etc. People just selling a random mix of smaller personal items, 2nd hand or one off collections but exceeding the £1000 a year probably don't need to be concerned at all 

superbigal

soolin said:

“HMRC has earmarked £36.69 million, including 24 full-time staff, to enforce this new measure.”

Decent salary that at circa 1.5 Million pa.  How do you apply.

martindow

I imagine a search of the database to cross-reference VAT registration could quite quickly and cheaply identify some of the worst offenders.  It would be sensible to chase the greatest potential returns rather than small scale tax evaders.

soolin

martindow said:

I imagine a search of the database to cross-reference VAT registration could quite quickly and cheaply identify some of the worst offenders.  It would be sensible to chase the greatest potential returns rather than small scale tax evaders.

I suspect you are right, a few big wins to justify the cost then pick round the edges of some small misregistered traders just to worry people into declaring their income. 

My background is tax HMRC have had periodic campaigns like this, I've seen a lot of completely random people targeted, but in enough quantity that the news gets out that you might get caught. Catching half a dozen might have the quick result that half a dozen others might suddenly remember they need to declare their income. 

I will continue to reassure people though that truly private sellers need not worry, the rules about trading are quite clear and some of the nonsense I'm seeing on other sites and forums about everyone needing to declare is just causing panic. 

forgotmyname

More money down the drain???  A simple check could cross reference all the non trading companies making more than
enough money on ebay to be vat registered yet they have zero accounts and the company value is £1.

Unless the 24 extra staff are all IT boffins installing systems to auto check that and more then I doubt they will recover
the initial outlay.  And knowing government stuff it's likely to be bodged and cost even more to fix it and make it
almost workable.