HMRC DONT BELIEVE WHAT THE MEDIA AND SOME PEOPLE ARE SAYING

[jackstackcornwall]

some media outlets and miss informed people are spreading the word that the Tax man is after you ,no they are not, scare mongering is doing the job it self ,its nothing to worry about , the tax people only know what you tell them and as long as you are an honest seller and do your tax return from the details on your ebay then you have nothing to worry about  the fear is far worse than the truth 

[technthread]

I wonder if Ben uses promoted listings so his £2,900 profit on £18,000 is just after eBay fees 😅.

Seriously though, if Ben was a legitimate private seller how would he know his profit was £2,900 unless he recorded all of his purchases and did book keeping like a trader. In the past I'd say that was never realistically going to happen, now it would be sensible but in reality it is just scaring a lot of people off selling until they see how the dust settles. 

[theelench]

Yes, it would be sensible because, effectively, all sellers who think it likely that they might go over either of the thresholds during a year, need to.  On the basis of "Just in case" HMRC questions whether they are trading or not.

When I started Self Employment over 30 years ago, I was given a free book-keeping course by the D of E.

It started with the Instructor asking "Why bother keeping Books at all?"

The answer.  "Because they are your protection if HMRC question what you put in your Tax Return."  Your book-keeping figures should back-up and prove your Return is correct, not whatever HMRC thinks it should be.  It is up to the seller to disprove what HMRC says and that applies to the sales figures ebay gives them for private sellers, just as much as it does for business sellers. 

Of course it's scaring a lot of people off, the majority have never been Self-Employed or engaged in any sort of taxable trading and have no idea how to keep books.  All they know is PAYE and often only have a vague idea of how that works.   (I worked in a Wages Office at one time and it is surprising how many people, even today, believe that overtime is taxed at a higher rate than basic hours.)

As for some sellers waiting "to see how the dust settles", I'd advise against doing that.  If you're selling off a collection, or clearing a relative's house which might cross the thresholds, start keeping records right away, if only to be "on the safe-side".

From my experience, yes, next year HMRC will probably be very busy with obvious businesses masquerading as private sellers.  After that, as taxes so often do, they are refined and grow in scope and size.  Just a guess, but in a few years it will probably be automatic that crossing a threshold results in completion of a Tax Return being requested and will see the erosion of the tax free sale of personal possessions, in favour of something more like the American system where more or less any income is declarable and taxable.

[**grandpa**]

May I ask why the other 37 countries in the OECD would be in favour of something more like the American system?

[555njp]

From all the comments I see on eBay, I think a lot of people who buy to sell, especially secondhand goods from car boots or charity shops, genuinely believe they are not operating a 'proper' business so think selling via a private account is perfectly ok and that trading and tax laws do not apply to them!

I think the HMRC examples are pretty clear though if people bother to read them.

Surely most will know if they are trading or not, just don't want to admit it!

Another bit of misinformation from eBay.
They say the reporting of selling activity to HMRC is only for new accounts opened this year, then all accounts from next year.
I think that's incorrect as HMRC states:

"From 1 January 2024, digital platforms are required to collect and report seller information and income to HMRC. These digital platforms must report sellers’ income by January 2025."

No mention of it just being new accounts!

[technthread]

Most Western Governments are managing huge budget deficits and need to find more tax revenue (basically rearranging the deck chairs on the titanic let's be honest). If they like the look of some of the US systems they may copy them. Read up on their $600 rule for things like PayPal. 

[papso22]

Ebay is full of miscommunication over this issue, but at least they steer clear of the scaremongering that some posters seem to think is helpful.  I don't mean you by the way!

The new account error is by far the worst as it could lull some sellers into a false sense of security.

[**grandpa**]

Yes, but to change and develop systems of reporting and collection requires a massive investment in many cases; money which they simply do not have. Some may not be able to afford the deckchairs.

[technthread]

True but they can make the financial institutions and online selling platforms do a lot of the work in automatic reporting for them. If Central Bank Digital Currencies become a thing it becomes easier to monitor. 

I realise this is a rabbit hole, not to scaremonger or go too far into it... I'd like to think that we still have a good % of the population who are paying attention. Specifically many private sellers on eBay will be astute now and have already started keeping a record of their eBay I&E. 

[**grandpa**]

I assume, whether correctly or not, that much of the 'backroom effort' will be done by application of systems without any human intervention. Perhaps the application of AI? How intelligent it will be will very much depend on the intelligence of those who programme it?

I must admit I have had a scout around other websites on which others sell. There is very little, if any, comment on this subject. Are they confident that their sellers know what the score is or is eBay the "odd one out" in terms of their lack of action on 'private sellers'?

[technthread]

Yes I was going to edit my last post to add that AI is a game changer. I'm sure they have acknowledged it already, or soon will that we are very much using a 20th Century tax system with tweaks and it will evolve again with AI key in modernising it.

I don't think any of the platforms really care who is private or business to be honest. On eBay it is more of a topic between users as private sellers get free listings and more perks like fee promotions. If the fees were the same for everyone, fewer people would mention it. 

[**grandpa**]

I have noticed that this board has been an awfully lot quieter because of the fewer ‘private’ sellers complaining of the lack of offers in particular.

I used to sell on other sites and, as you say, they made no distinction between sellers. It is a peculiarity here and it should no longer be so.

A comment on fees. I fully agree basic fees should be the same for everyone. All scans or photos to be free and a low, simple listing fee to begin for all listings. After all, if it is really not worth selling, why list it if it costs? After that, then additional fees for whatever additional services are required.

My apologies to the OP, I digress from the subject in hand. As you have said, there has been too much misinformation and scaremongering about this. We will all need to wait and see what HMRC gremlins are unleashed.

[theelench]

I agree with you here and with your previous replies to @**grandpa** 

Following advice on here about keeping transaction details for at least a year in case of disputes / charge backs etc., I started keeping notes of items selling prices, fees, postage etc. on the back of the POP from the post office.  Especially after finding the Seller Hub so confusing, so I do have some basic figures.  I'd advise any private seller to keep something similar if they think they are likely to go over either of the annual thresholds.  I keep mine for a year.

With govts. trying to increase tax revenue and pay down debt, I can only see this measure becoming tighter in an effort to raise more.  We've all seen or heard how simply by freezing thresholds for a few years, how many more people have been pulled into paying tax by Fiscal Drag alone.  

If this measure turns out to be anything like as lucrative for the Exchequer as some on here think it will be, I do think it will be tightened to gain as much tax as possible.  If only because the Chancellor has milked every other source to the maximum he can get away with and any new source of revenue will be most welcome.

[theelench]

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@**grandpa** wrote:

I must admit I have had a scout around other websites on which others sell. There is very little, if any, comment on this subject. Are they confident that their sellers know what the score is or is eBay the "odd one out" in terms of their lack of action on 'private sellers'?

---

I can only comment on what I've seen on the ebid boards which tend to be much less active than here. 

There has been only one short thread that I've seen and I'd guess that most of the replies came from others that sell on both sites, after having read the announcements and discussions on ebay.  So far as I'm aware The Management over there has yet to comment at all, or make any sort of announcement.

Again only my guess that they will issue some sort of Site Update when they are ready to start collecting NINOs and worked out how they're going to do it.

[papso22]

"With govts. trying to increase tax revenue and pay down debt, I can only see this measure becoming tighter" 

"If this measure turns out to be anything like as lucrative for the Exchequer as some on here think it will be, I do think it will be tightened to gain as much tax as possible".

What measure? 

It's an international rule that requires data on online sales to be collected and shared.  It can only 'become tighter' with international agreement and as it's already pretty tight with the 30 items and £1,700 (approx) per year reporting limit, and given how complex it would be to change the rules, I don't think these will change.

The government can only tax what is taxable, if they want to tax personal item sales, then that would require a major change in direct tax legislation, not to mention extra resources for HMRC, and is not going to happen.

The only issue that some people need to be concerned with, and I agree this is a concern, is how to demonstrate to HMRC that a selling history of large quantities of the same sort of thing (such as a collection), is from disposing of personal assets and not trading.   

[vinylscot]

The question of what other sites are (or aren't doing) with regard to this is totally irrelevant on an eBay board. eBay isn't getting everything right, but they're at least getting out there early. While there are currently errors and inconsistencies in their messaging, at least that they are doing something. It's such a huge issue for eBay that they CAN'T afford to get it wrong, and I am reasonably confident that they won't.

The biggest "unknown" is how HMRC will approach this. There seems to be a general feeling (wishful thinking?) that HMRC will go after the "big players", and almost a complacency that small traders will be less of a priority. I don't go along with this. I fully expect HMRC to blitz much of the "low hanging fruit", the fairly straightforward smaller trader, from day one. This will provide faster results, and have the added bonus of getting the word out that HMRC is not playing games.

Statistically, each individual smaller trader will still be unlikely to be specifically targetted immediately, although they will still need to comply with the requirements, but taking this approach would give HMRC a large bank of precedent and publicity. (They will get some wrong, but HMRC have always made errors - this will be nothing new)

So I would echo the suggestions that all sellers keep records of their sales and associated costs. The volume of data involved is huge. It may be months, or even years, before your own activities are called into question. Don't make the mistake of thinking you've "got away with it" if you don't hear from HMRC for some time.

[papso22]

"I fully expect HMRC to blitz much of the "low hanging fruit", the fairly straightforward smaller trader, from day one. This will provide faster results, and have the added bonus of getting the word out that HMRC is not playing games."

I think low hanging fruit are the largest obvious traders that are not declaring the right tax.  It presumably takes the same resources to get to a tax decision that will withstand the scrutiny of a tax tribunal for a large case as a small case, but with more tax collected if HMRC are right.   All HMRC decsions can be reviewed internally or appealed to the Tribunal, they are not a law unto themselves.   

A strategy by HMRC that is based on lots of small 'wins' against people who can't fight back would not raise the revenue that they want, or look good for them.  

I understand that all these new rules mean is that HMRC has more data to work with, it doesn't necessarily mean that HMRC have anything to prove, or an agenda to go after different sellers than they would have done before the new reporting rules came in. 

As we have seen from the many posts on here, it is the smaller 'traders' that are the grey area and (in my opinion) are the least likely to be targetted. 

[vinylscot]

There are five principal reasons why I believe HMRC will go for smaller traders (in general) first; 

1) It's what they do. How often have you seen the little guy "punished" while the big guys "get away with it"?

2) Smaller traders are less likely to attempt to fight back, so will be easier to chase. The big guys have more to fight for, so will do so.

3) A failure to go after the smaller guys may lead to complacency. A lot of wins for HMRC early on will act as more of a deterrent.

4) It will give them "practice" before moving on to the big guys.

5) The big guys will still be there, when (many of) the smaller traders have been covered - as you have said yourself, they are easily identified.

Unusually, this isn't intended principally as a revenue-raising measure for HMRC. It wasn't their idea, and it's not high on their list of priorities, as can be seen by the paltry recources they are allocating.

[papso22]

We will just have to wait and see who is right!

[*vyolla*]

I note that Vinted are sending their sellers who meet the reporting criteria a 'seller form' by November 2024, I guess this must be when the online platforms will be asking for national insurance numbers then. 

If you reach the criteria for reporting, we’ll reach out to you by November 2024.

The report is easy to complete

We’ll pre-fill the report with information from your account, including details used for your Vinted Balance and withdrawals. You don't need to calculate or count anything yourself.

To complete the HMRC report:

1. Confirm your details we’ve added from your account
2. Add your National Insurance (NI) number
3. Submit the report

   Please check that your details are correct before submitting the report.

   Protecting your information

   To submit a seller report, we only require your NI number, which is only shared with HMRC.

[555njp]

Of course the big difference with Vinted is they don't permit business sellers in the uk.

They are also extremely good at spotting anything that even suggests a possible business transaction and removing those listings very quickly. 
Consequently, unless they do start allowing business accounts (something they are considering) at present, I doubt HMRC would have much to look at as Vinted won't have anything like the volume of illegal trading that eBay attracts?