Hmrc letter

Mr_Countdown

I’ve had a letter from HMRC saying they have information showing I’ve earned income from online marketplace sales in tax year ending 5 April 2023. 

I did regularly sell personal possessions and a few bits for friends and family on eBay over the years in my spare time. I’ve no idea though exactly how much or how to respond to HMRC. Is it worth giving them a call and seeing if they have records showing how much?
Also I assume I will have to complete a self assessment form for this period. 

Almost all of the items were things I’d had when I was married. Since I got divorced I  live in a flat I’ve been clearing things out. 

Please no abuse or judging, I just want some advice on how to proceed for the best. 

Thanks. 

martindow

Mr_Countdown said:

I’ve had a letter from HMRC saying they have information showing I’ve earned income from online marketplace sales in tax year ending 5 April 2023. 

I did regularly sell personal possessions and a few bits for friends and family on eBay over the years in my spare time. I’ve no idea though exactly how much or how to respond to HMRC. Is it worth giving them a call and seeing if they have records showing how much?
Also I assume I will have to complete a self assessment form for this period. 

Almost all of the items were things I’d had when I was married. Since I got divorced I  live in a flat I’ve been clearing things out. 

Please no abuse or judging, I just want some advice on how to proceed for the best. 

Thanks.

If you are not buying with a view to selling and making a profit, then you are not liable to pay tax and it would be best not to cloud the issue by making a return.  I would contact them to tell them that you are clearing clutter from your house and not trading.

The only issue is you selling on behalf of others.  Are you keeping a bit back for the trouble of selling for them?  That could be considered I suppose as profit making, but I imagine the amounts involved there will be small.

Spoonie_Turtle

martindow said:

Mr_Countdown said:

I’ve had a letter from HMRC saying they have information showing I’ve earned income from online marketplace sales in tax year ending 5 April 2023. 

I did regularly sell personal possessions and a few bits for friends and family on eBay over the years in my spare time. I’ve no idea though exactly how much or how to respond to HMRC. Is it worth giving them a call and seeing if they have records showing how much?
Also I assume I will have to complete a self assessment form for this period. 

Almost all of the items were things I’d had when I was married. Since I got divorced I  live in a flat I’ve been clearing things out. 

Please no abuse or judging, I just want some advice on how to proceed for the best. 

Thanks.

The only issue is you selling on behalf of others.  Are you keeping a bit back for the trouble of selling for them?  That could be considered I suppose as profit making, but I imagine the amounts involved there will be small.

The threshold at which you'd need to register if you are doing that, OP, is £1,000 in a tax year.

Hoenir

Mr_Countdown said:

 I’ve no idea though exactly how much 

There'll be a sales history report on Ebay. 

Were you paid by Paypal ? As there'll be a report there of the net income generated. 

These enquiries arise due to the volume  and/or value of the transactions over a period of time. 

HMRC have the power to assess what they believe your net income to be. Onus is on you to disprove. Failure to declare for self assessment , unpaid tax, interest  and penalties there on can soon result in a significant additional burden.

Self voluntary declaration/admission is normally dealt with in a lenient manner. Unless the amounts involved are significant and it's believed there was a genuine attempt to evade. 

soolin

I am well out of date with these situations, although I used to deal with HMRC and DWP enquiry letters a fair bit as a volunteer. If you genuinely only sold things you didn’t want them I’m surprised you are being checked, the threshold is usually quite high due to lack of staff with only people who ‘look like’ a business being investigated. Usual triggers would be multiples of the same items, lots of new items or more commonly clothes in all sizes . Clothes were always the ones that seemed to trigger this where resellers sold every size from baby to adult and everything in between.

if you genuinely only sold your own unwanted items then tell HMRC that , the usual suggestion is to offer some ‘proof’ perhaps old photos of an overstuffed wardrobe, or a huge LP /CD collection etc. How this ends depends really on what your selling history looks like when compared to a reselling business.

If you agree to any element of business selling then it is likely HMRC will raise an estimated high bill, and you will be expected to prepare accounts that refute that .

Hoenir

Spoonie_Turtle said:

martindow said:

Mr_Countdown said:

I’ve had a letter from HMRC saying they have information showing I’ve earned income from online marketplace sales in tax year ending 5 April 2023. 

I did regularly sell personal possessions and a few bits for friends and family on eBay over the years in my spare time. I’ve no idea though exactly how much or how to respond to HMRC. Is it worth giving them a call and seeing if they have records showing how much?
Also I assume I will have to complete a self assessment form for this period. 

Almost all of the items were things I’d had when I was married. Since I got divorced I  live in a flat I’ve been clearing things out. 

Please no abuse or judging, I just want some advice on how to proceed for the best. 

Thanks.

The only issue is you selling on behalf of others.  Are you keeping a bit back for the trouble of selling for them?  That could be considered I suppose as profit making, but I imagine the amounts involved there will be small.

The threshold at which you'd need to register if you are doing that, OP, is £1,000 in a tax year.

That's £1,000 of net profit. 

Ebay now automatically reports accounts that are have 30 items or more of sales, and/or exceed an annual gross sales value of £1,700 (this excludes any carriage costs and Ebay fees).  Ebay will report to the HMRC the nature of each item sold. 

soolin

Hoenir said:

Spoonie_Turtle said:

martindow said:

Mr_Countdown said:

I’ve had a letter from HMRC saying they have information showing I’ve earned income from online marketplace sales in tax year ending 5 April 2023. 

I did regularly sell personal possessions and a few bits for friends and family on eBay over the years in my spare time. I’ve no idea though exactly how much or how to respond to HMRC. Is it worth giving them a call and seeing if they have records showing how much?
Also I assume I will have to complete a self assessment form for this period. 

Almost all of the items were things I’d had when I was married. Since I got divorced I  live in a flat I’ve been clearing things out. 

Please no abuse or judging, I just want some advice on how to proceed for the best. 

Thanks.

The only issue is you selling on behalf of others.  Are you keeping a bit back for the trouble of selling for them?  That could be considered I suppose as profit making, but I imagine the amounts involved there will be small.

The threshold at which you'd need to register if you are doing that, OP, is £1,000 in a tax year.

That's £1,000 of net profit. 

Ebay now automatically reports accounts that are have 30 items or more of sales, and/or exceed an annual gross sales value of £1,700 (this excludes any carriage costs and Ebay fees).  Ebay will report to the HMRC the nature of each item sold. 

The £1000 reportable level is gross turnover, not profit. 

https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income#trade

If your annual gross income from these is £1,000 or less, you do not need to tell HMRC, unless:…….

Hoenir

soolin said:

Hoenir said:

Spoonie_Turtle said:

martindow said:

Mr_Countdown said:

I’ve had a letter from HMRC saying they have information showing I’ve earned income from online marketplace sales in tax year ending 5 April 2023. 

I did regularly sell personal possessions and a few bits for friends and family on eBay over the years in my spare time. I’ve no idea though exactly how much or how to respond to HMRC. Is it worth giving them a call and seeing if they have records showing how much?
Also I assume I will have to complete a self assessment form for this period. 

Almost all of the items were things I’d had when I was married. Since I got divorced I  live in a flat I’ve been clearing things out. 

Please no abuse or judging, I just want some advice on how to proceed for the best. 

Thanks.

The only issue is you selling on behalf of others.  Are you keeping a bit back for the trouble of selling for them?  That could be considered I suppose as profit making, but I imagine the amounts involved there will be small.

The threshold at which you'd need to register if you are doing that, OP, is £1,000 in a tax year.

That's £1,000 of net profit. 

Ebay now automatically reports accounts that are have 30 items or more of sales, and/or exceed an annual gross sales value of £1,700 (this excludes any carriage costs and Ebay fees).  Ebay will report to the HMRC the nature of each item sold. 

The £1000 reportable level is gross turnover, not profit. 

https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income#trade

If your annual gross income from these is £1,000 or less, you do not need to tell HMRC, unless:…….

That's not what online platforms report. 

https://www.gov.uk/government/news/information-for-online-sellers

The important thing to remember is that the HMRC can charge you a penalty if the records you keep are not accurate, complete and readable or if you do not retain them for the required period of time. 

Spoonie_Turtle

Hoenir said:

soolin said:

Hoenir said:

Spoonie_Turtle said:

martindow said:

Mr_Countdown said:

I’ve had a letter from HMRC saying they have information showing I’ve earned income from online marketplace sales in tax year ending 5 April 2023. 

I did regularly sell personal possessions and a few bits for friends and family on eBay over the years in my spare time. I’ve no idea though exactly how much or how to respond to HMRC. Is it worth giving them a call and seeing if they have records showing how much?
Also I assume I will have to complete a self assessment form for this period. 

Almost all of the items were things I’d had when I was married. Since I got divorced I  live in a flat I’ve been clearing things out. 

Please no abuse or judging, I just want some advice on how to proceed for the best. 

Thanks.

The only issue is you selling on behalf of others.  Are you keeping a bit back for the trouble of selling for them?  That could be considered I suppose as profit making, but I imagine the amounts involved there will be small.

The threshold at which you'd need to register if you are doing that, OP, is £1,000 in a tax year.

That's £1,000 of net profit. 

Ebay now automatically reports accounts that are have 30 items or more of sales, and/or exceed an annual gross sales value of £1,700 (this excludes any carriage costs and Ebay fees).  Ebay will report to the HMRC the nature of each item sold. 

The £1000 reportable level is gross turnover, not profit. 

https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income#trade

If your annual gross income from these is £1,000 or less, you do not need to tell HMRC, unless:…….

That's not what online platforms report. 

https://www.gov.uk/government/news/information-for-online-sellers

The important thing to remember is that the HMRC can charge you a penalty if the records you keep are not accurate, complete and readable or if you do not retain them for the required period of time. 

Your link itself does say total income of £1,000.
It's separate from what online platforms do actually report, yes, but the rules for people declaring have not changed.

"The sharing of sales data does not automatically mean you need to complete a tax return, however you may need to register for Self Assessment and pay tax, if you:

• buy goods for resale or make goods with the intention of selling them for a profit
• offer a service through a digital platform – such as being a delivery driver or letting out a holiday home through a website
• AND generate a total income from trading or providing services online of more than £1,000 before deducting expenses in any tax year"

See also the link soolin posted, which said:
"You must tell HMRC if you have:

• gross trading income over £1,000 - register for Self Assessment"

Hoenir

None of this helps the OP respond to the HMRC's very direct enquiry. This isn't like batting away a parking ticket. 

Spoonie_Turtle

It sort of does, because OP needs to know the facts in order to work out how to proceed.

The facts are:
Selling personal possessions is ignored.
Gross income over £1,000 from trading in a single tax year should be declared.  Whether tax is payable on that depends on whether someone has used all of their Personal Allowance during that tax year.

The only question for OP then is, selling for family and friends - did they receive any money for doing so? 
If so, is the trading income the sale money from eBay, or is it the amount kept for being the one to sell the items?
My interpretation of it would be, if they are receiving money for it, the service they are providing is doing the selling for friends and family (rather than trading being the items they are selling) so the income for that specifically is only what's kept.  But, I am no expert so I could be wrong … yet sadly I suspect the people manning the phones at HMRC aren't either, so they may just hear 'eBay' and automatically say yes, all the sale money counts.

However if OP isn't keeping any of the money for selling friends and family's unwanted items, or if they are and the gross income for the 22/23 tax year for those particular items was under £1,000 anyway, then there's nothing they need to declare. 
It would then just be a matter of how exactly to respond to HMRC to tell them the situation (in writing, to be sure) and expect that to be the end of it.