Got the dreaded letter from HMRC

[jilly1910]

Have received a letter from HMRC about online selling and money earned and they’ve asked me to contact them to disclose my earnings .  The thing is my whole family use my EBay account , daughter sells her unwanted clothes , my son his toys , I sell my own stuff BUT I do also sell items which Ive found cheap and know I can get abit more cash for.

My question is will HMRC differentiate between the two and how do I prove to them what was mine/my children’s in the first place  and what I had found and bought.  I suppose the split is 50/50 

[papso22]

It's for you to prove to HMRC what is private, what is business, and what profit you made if the business sales were over £1,000.

They will probably accept something that looks reasonable,  but that's not definite.

It won't help that you used a private account to sell things you bought to sell.

[jilly1910]

I’ve just kept the account I’ve always had, never thought it needed changing I wasnt   an online shop selling loads and loads of the same things if that was the case then yes I would have classed myself as a proper business but selling  afew random bits throughout the year , well I wouldn’t have even thought about it that way 

[dancewithadingo · Accepted solution]

Good Morning Jilly

I would imagine that The Inland Revenue will probably class all the sales/income generated through your account as being yours.  Additionally all income has to be declared,unless it is under the threshold or you are selling off personal items. 

If the other people living with you are over 18 then they should have opened their own eBay accounts. You may find the next few months painful as they will go through everything with a 'fine tooth comb'. 

The best advice I can give you is to answer every question fully and honestly. Don't try and hide anything. 

[twin--turbo]

By your title "Got the dreaded letter from HMRC" kinda says you were expecting it. 

Your best option to clarify things , is to collate all your family sales add them to your accounts as money in/out and no proffit,  Mark the source and destination of the funds as the family member. 

[jilly1910]

Thought it would be inevitable once the selling threshold had been passed so yes was expecting it . Guessing a lot of people will be in the same position 

[northumbrian]

get an accountant

who knows the score on these matters

your very likely to dig yourself in deeper  if you go it alonre

[suelel1968]

Only you know how much you sold that is taxable. Even HMRC don't know. The data they will be collecting from ebay is calendar year. The tax you owe is tax year April to March. There is a big section on HMRC about deductable expenses, more money than you probably think. This "fine tooth comb" that is talked bout is is used by 24 extra staff to do the job. You are not the target of the 24. The HMRC computer has sent you a letter because you have a certain amount of sales in the year, not because they know what you sell or where you got it. 

I do not condone not paying tax, neither do i condone trying to scare people who are asking questions to be better informed. Start keeping records of what you buy to sell. If the revenue is less than £1000 nothing to pay. NFA. If it is over that there will be tax to pay. They are not "coming" for you, everyone who has sold over a certain amount will get this letter. 

[*vyolla*]

The tax year covered would be April 2023 - April 2024, but as eBay sales reports cover the calendar year Jan 2024 to Dec 2024 there would presumably only be a short period Jan 2024 to April 2024 that HMRC are asking for accounts for.

However, if you weren't registered for self assessment for that tax year then I don't believe that you can do it retrospectively now, so cannot offset expenses. 

I do agree with @dancewithadingo that all sales on your account will be treated as your items. If you claim to be selling on behalf of other family members and passing monies on to them then that could be a whole new can of worms for them.

But, I would say that you need an accountant to give you professional advice, you'll get varying recommendations from people here, but it may not be correct. I would not take professional tax advice from an eBay forum. 

[m25jet]

I note that you said in your post that your whole family use your eBay account to sell their unwanted items.  This is more than likely to be part of the reason as to why the taxman is checking up on you now, as their own earnings may well have resulted in the total amount earned on your account being high enough to have caught the eye of HMRC, who may well suspect you of running an unregistered business.

In view of the above I would advise you to forbid your family members from selling on your own eBay account from now on.  Change your eBay password if they already know what it is and don't tell them the new one.  Should they still wish to sell off their own unwanted items insist that they open up their own eBay accounts specifically for that purpose, rather than relying on using your own eBay account.  If you do that then if you're still using your eBay account to sell off your own unwanted items but are the only person in your family selling anything from your own eBay account then the overall total amount sold during any tax year may fall to an amount that is lower than the threshold at which you have to declare how much income you have earned from all of your sales.  However, I would advise you to start keeping a record of how much you've made from each and every sale, just in case you do end up getting another letter from HMRC in the future asking how much you've earned from your sales.

[twin--turbo]

"They are not "coming" for you, everyone who has sold over a certain amount will get this letter"

If they are registered for self assessment already, then maybe not. 

And the threshold is not the £1000 turnover, there's a figure of £6000 banded about for sale of personal possessions but even that is not clear.

[crg_music]

Firstly contact them. It might just be casual phone interview for them to decide if you need to do a tax return. If its close the operator may have some discretion.

Then deal with it as it comes, tax is personal so only they can tell you for sure, be honest and polite. HMRC have always been surprisingly reasonable imo. No more black suits and bowler hats.

[*vyolla*]

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@twin--turbo wrote:

"They are not "coming" for you, everyone who has sold over a certain amount will get this letter"

If they are registered for self assessment already, then maybe not. 

And the threshold is not the £1000 turnover, there's a figure of £6000 banded about for sale of personal possessions but even that is not clear.

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The £1,000 turnover figure is the Trading Allowance for small business sellers - it's the yardstick by which anyone who is a business seller must complete a self assessment tax return. They need to declare income to HMRC once they reach £1,000 worth of sales. They may not be taxed on £1,000 if that's not profit, but they have to complete a tax return, and to do that they need to be registered for self assessment.

The £6,000 figure you mention is Capital Gains Tax, which only applies if you end up selling one item or a collection of items in one go for over £6,000.

[twin--turbo]

As a UK resident, if you sell over £1,740 or complete 30 or more sales transactions on eBay within a calendar year, eBay is obligated to report your information to HMRC, starting January 2025. 

You can still sell over 1740 of personal belongings, but you will be contacted by HMRC ( but I would suspect not if your already on self assessment for another reason )

[*vyolla*]

Yes, that's correct. eBay announced their digital sales reporting a while back, along with the other selling platforms. Here's their guidance page covering that:

This eBay guidance page explains what's being reported and when:

https://www.ebay.co.uk/help/account/regulatory/uk-digital-sales-reporting?id=5454&st=3&pos=1&query=U...

You can still sell over 1740 of personal belongings, but you will be contacted by HMRC ( but I would suspect not if your already on self assessment for another reason )

Not necessarily, it all depends what kind of items you're listing. HMRC have an algorithm that will check what size clothing and shoes a seller is listing, if varying sizes this indicates that they may be buying from charity shops and/or boot fairs with the intentional of re-selling. Then HMRC will send out an enquiry letter.

@twin--turbo

[banditfrenzy]

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@jilly1910 wrote:

 BUT I do also sell items which Ive found cheap and know I can get abit more cash for.

My question is will HMRC differentiate between the two and how do I prove to them what was mine/my children’s in the first place  and what I had found and bought.  I suppose the split is 50/50 

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I'm just guessing here but I bet your MO is to trawl the charity shops & car boots for stock & over the years you've developed a fairly good eye for what will sell here on ebay.

This is called trading & HMRC now want to know why you aren't declaring your income gained from it. If you want to contact them yourself then as has been said do not lie to them. They are not stupid, they do this everyday, they will ask you questions that they already know the answer to & if you lie to them . . . . !

Personally, I would first speak to an accountant, maybe even an initial free consultation. They will know how best to handle this because depending on how far HMRC want to take it you might be needing to substantially increase your trading activity to pay the back tax & fines.