HMRC now has access to online selling data, and those failing to comply could face investigations – or even penalties that might exceed their actual earnings
Tax specialists are raising concerns as growing numbers of UK residents flock to platforms such as eBay, Etsy and Vinted to supplement their earnings. HMRC now possesses access to online selling information, and those who do not follow regulations could face investigations or substantial penalties that may outweigh their actual profits.
From the beginning of this year, HMRC started obtaining details on transactions and account holders for anyone carrying out more than 30 deals each year, regardless of profit margins. For Vinted users particularly, reporting limits have been reduced, with individuals completing either 30 transactions annually or exceeding £1,700 in total sales within 365 days now subject to data sharing with HMRC, according to Plymouth Live.
Lee Murphy, Managing Director of The Accountancy Partnership, a specialist accountancy firm handling tax submissions for Amazon and eBay traders, has outlined how HMRC could target you. He said: “HMRC uses data provided by the platform, whether this is Etsy, Vinted or even eBay, to match against each individual’s tax records.
“Those who’ve exceeded an annual trading allowance of £1,000 and also fail to declare this may receive reminder letters to ensure that they get their tax return done. While you may think this is just a scare tactic, ignoring these types of letters may lead to further full tax inquiries and criminal investigations.”
Murphy continued: “If you are selling unwanted personal items and not making repeat trades or dropshipping, then you’re unlikely to face HMRC scrutiny.” Nevertheless, should you earn more than £1,000 from your side business annually, or exceed 30 sales within a 12-month period, notify HMRC to prevent penalties or possible criminal proceedings.
Should you be unsure about how many items you’ve sold or the cash you’ve made so far, it’s wise to go back and find your comprehensive sales records. Don’t forget to monitor any costs linked to the sales, including stamps, packaging materials, and delivery charges, as you might be able to claim some of this back when filling out your Self-Assessment tax return.
To work out the amount of tax you ought to be paying for flogging items online, you can utilise this tax calculator: https://www.theaccountancy.co.uk/calculators/limited-company-vs-sole-trader-calculator..