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 

[sml192]

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@medealady wrote:

To add to the issue I believe the 'side hustle' allowance has been increased to £3,000 probably after HMRC realised the enormity of checking pensioners ebay accounts!  Also the 30 items is pretty silly. Those selling dolls clothes, trading cards, stamps, toy accessories can easily reach that yet not make more than a couple of hundred pounds.

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It is the Income Tax Self Assessment reporting threshold that they are proposing to change not the Trading Allowance.

The 30 item reporting threshold does seem very low but it is set by the OECD, not HMRC, and is the same for every country that has signed up. 

[kath3735_wxmjn]

E bay just send the information regarding your sales to HMRC,  doubt if they would be getting that wrong especially as the information is on your account anyway so you could always check it monthly!   As for e bay getting mixed up between private and business i would say it is the other way around, it is the 'private' sellers who seem not to understand that they should be trading as a business.   They are the ones HMRC hopefully will be going after rather than the genuine ones.

[kath3735_wxmjn]

not yet, it is only a possibility until it is brought into action and we all know how the governments like to u turn.   Not sure why you mention pensioners, why are we different to anyone else?   The limits were an OECD decision not HMRC.

[papso22]

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@kath3735_wxmjn wrote:

not yet, it is only a possibility until it is brought into action and we all know how the governments like to u turn.   Not sure why you mention pensioners, why are we different to anyone else?   The limits were an OECD decision not HMRC.

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It's simply a reporting easement, not a change in the actual tax laws or thresholds, so wouldn't really need a U turn unless HMRC haven't got the new reporting method software sorted out in time.

[kath3735_wxmjn]

it will all be done by algorithms etc, not like a tax man (or woman) is going to sitting at their desk going through all the e bay reports.  Computers will be set up to pull out any of us that interest them within their search parameters.

[kath3735_wxmjn]

a government department with 'new software' and 'sorted out in time' are two things that never happen!   Worked for the government in a couple of different departments and any time new stuff was brought in it was a nightmare.

[vinylscot]

Even if the government were to get its act together, the sheer volume of data involved will mean that very few cases will ever be looked at by a human.

Some sort of prioritisation will be required by HMRC. They may decide to go after those with the highest figures, which would make sense, but may be more time-consuming, requiring some human input; or they may go after the "low-hanging fruit", so they can show instant results, maybe by issuing automated "scare" letters which will convince many just to pay up, even if they shouldn't really need to.

I would imagine the best thing to do (if you hope for a quiet life) would be to avoid drawing attention to yourself by, say, refusing to divulge your NINO. Your data will still be reported to HMRC, who will now need to match you up via information already held. This will probably still be largely automated, but less so, and common sense would suggest these would be where HMRC should concentrate their efforts. It's a self-selecting pool of suspicious accounts.

[chris.n7]

If you're just selling unwanted personal items you shouldn't need to worry about paying tax. You'll just need to clarify your sales to HMRC, that's all.

Looking at your current listings and recently sold items I'd say you have nothing to worry about.

https://www.tax.service.gov.uk/guidance/check-non-paye-income/start/how-did-you-receive-additional-i...

[jofo_441]

Thanks everyone. My anxiety is through the roof because of this 😂. 

[arkwebus]

Do please remember that it is "profit" that you would have to pay any tax on!

£1000 or £3000 now must take a lot of doing.  

Almost by definition perhaps you can work out what is your personal stuff [you will have had it for ages and will have no receipts]

Business - which is what HMRC is interested in - does not include selling your personal stuff or that of your family [silly though it is to let them use your account] @jilly1910 

[lucy_farmer]

'Do please remember that it is "profit" that you would have to pay any tax on!'

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But if the OP is a private seller, how can anybody tell what is 'profit'?

If you haven't got receipts or 'costs' to put through how can you set anything against your income? Because if you're assuming, as a private seller, that selling your own/your families stuff is not taxable, why would you be keeping books?

It's very difficult to prove a negative....

[arkwebus]

Oh what joy it must be to work for HMRC these days. 

O/P states "BUT I do also sell items which Ive found cheap and know I can get abit more cash for."

Were it me I would simply produce a schedule of sales showing those items which they bought to resell and a vast list showing those sold by each family member.   If HMRC disagree go to tribunal.  

@lucy_farmer 

[vinylscot]

Let's come back to the real world. The OP has already acknowledged that she is the seller of ALL of these items, by having them sold on her account.

If you could go back in time, and re-apportion sales to other people, everyone would do it. Every small-time trader's wife, auntie and grandmother would be dragged in, and claimed to be the actual seller. It would be ridiculous.

HMRC will not be interested in any "lists" or justifications in this case. And HMRC will be aware that this ruse will be tried often. They will have a standard response ready, and it will not be one which pleases the OP. The OP was the seller, and will remain so.

If her sales breach the limits, which looks almost certain, her data will be passed to HMRC, who may or may not be in touch at some point. The best OP can hope to do is convince them that the majority of their sales are of her own personal items. I have no idea how that will turn out.

[twin--turbo]

I have been doing self assessment for 9 years , been trying to build a retirement business. but posting a loss for 5 out of 9 years, no rebate on tax though. 

Tax laws have not changed, side hustles have always been tax avoidance but now the tax man is closing the net. 

[carrotdrusus2]

This is on HMRC Website

Chattels

The word ‘chattel’ is a legal term meaning an item of tangible, movable property – something you can both touch and move. Your personal possessions will normally be chattels. Including:

• items of household furniture
• paintings, antiques, items of crockery and china, plate and silverware
• motor cars, lorries, motorcycles
• items of plant and machinery not permanently fixed to a building

Private cars are exempt from Capital Gains Tax and many chattels having only a limited lifespan are also exempt. (See the guidance on wasting assets). But if you dispose of any other chattel, you may be liable to Capital Gains Tax.

Have you made a gain

You only need to include in your tax return any gain on the disposal of a chattel where the disposal proceeds were more than £6,000 and the chattel is not exempt from Capital Gains Tax. The disposal proceeds will normally be the amount of money you received when you disposed of the chattel. Sometimes, however, you need to use the market value of the chattel instead. For example, if you gave it away or sold it to a connected person. See the guidance on when to use the market value in the Capital Gains Tax summary notes.

Disposal of single chattels explains how to calculate gains and losses.

Sets of chattels explains the special rules that apply if you dispose of a set of chattels.

Wasting assets and business assets explain the rules for chattels that are wasting assets or that were used in a business.

[papso22]

Capital Gains Tax (which is what your post is about), is extremely unlikely to apply to a sale on ebay, not least because a member would be extremely foolish to sell something of that value on here.

Income tax on the other hand..........

[carrotdrusus2]

As we are talking about personal possessions and not TRADING, you couldnt be more wrong.

HMRC were more than happy to accept this for ALL of my sales on Ebay.

[papso22]

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@carrotdrusus2 wrote:

As we are talking about personal possessions and not TRADING, you couldnt be more wrong.

HMRC were more than happy to accept this for ALL of my sales on Ebay.

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How am I wrong?

Personal possessions, which is presumably what you were selling, are not subject to income tax, and only subject to Capital Gains tax in exceptional circumstances.

This bit of my post:

Income tax on the other hand..........

was a general comment that income tax could be applicable to ebay sales (not ebay sales of personal possessions).  You have taken it out of context as applying to the sale of personal possessions, it does not.

[carrotdrusus2]

You should really be advising the small and medium businesses on here as to what they are going to do when HMRC come calling for them, as it is they who will be the ones being investigated by the tax officials after perusing the information from Ebay, as the Chancellor mentioned in her statement yesterday.

Instead of trying to put the fear of God into people raising a few thousand pounds selling their own items.

50000 odd posts . What a waste of a life.

[papso22]

I have a very full life thank you.  I also think it's helpful to make sure people understand how the law applies to them so they can make informed choices.