The Taxman is coming

[martmarg41]

Daily Mail article 18th October.

From 1st Jan 2024 all on-line sales platforms will have to notify HMRC of sales data for sellers.

Can Ebay please confirm what data they will be providing. 

[cobwebcottage]

Sellers details and income received I would imagine and not just from Ebay.

[4_bathrooms]

HMRC have been gathering eBay UK sellers' data since 2010 (along with lots of data from many other places).

You might be interested in reading about HMRC's Connect supercomputer.

[theelench]

Sorry, even with my specs on and 'zoom'  I can't read much more than the head-line.

But if it's the same as a similar article I read a few days ago on Yahoo (which also quoted the 1 Jan 24 date) it seemed to say that HMRC was going to start looking for discrepencies between what workers for such platforms as Deliveroo were declaring on their tax returns with info. from the companies on what they say they paid the workers. 

Ebay wasn't mentioned by name, although apart from delivery type companies, etsy was also named.  

From what I've read on here, according to some of the "You should be registered as a business" enthusiasts, HMRC are already provided with sellers sales figures and details by ebay.

But they "Cry wolf" with dire warnings of "midnight knock on the door" regularly, so I was left rather confused as to what is happening now, what will start from 1/1/24 and why etsy was singled out as the only selling platform I saw mention of.

[messier44000]

Old news.

Many years ago I had the letter through the door from HMRC who were contacting lots 

of eBay sellers they noticed were selling for profit, or words to that effect.

Said to contact them if you were, and to ignore the letter if you were already registered.

So yes, HMRC do check eBay, and yes they do take action (unlike eBay). Most may be lucky and 

go under the radar, while others may be getting the dreaded brown envelope in the morning.

[tech-tonix]

I've worked on the basis that this happens or will happen, these last 18 or so years

[martmarg41]

From 1st Jan it is a legal requirement for all on-line platforms to report data about income of their users (previously voluntary). HMRC has set earmarked £36.69m and 24 staff to enforce this. I therefore assume that they think there is something to be gained from chasing us.

[4_bathrooms]

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@theelench wrote:

From what I've read on here, according to some of the "You should be registered as a business" enthusiasts, HMRC are already provided with sellers sales figures and details by ebay.

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It seems to be every 4 to 5 years that HMRC performs a "crackdown" on undeclared trading income from online marketplaces; the last was their "One To Many" letter campaign earlier this year (they took a break during Covid). But HMRC are only interested in undeclared trading income; they couldn't care less what type of account a seller is operating.

[derbyram26]

The newspaper articles I've read on this so far seem rather vague, and leave quite a few unanswered questions. Clearly, HMRC want to clamp down on Traders - but how do you define Trader? My understanding, also, is that we are talking £1,000 'PROFIT', not total sales.
So, I presume if you sell £1,000+ worth of items on EBay in 12 months, you might get a letter from HMRC. In my case, I'm retired, and don't need to fill in a Tax Form at present - so, I might be forced to complete one in the future. But - here's the big question mark!!! .... my sales on EBay are decluttering of items I've bought for my own use over the years. Most of the items will sell at a loss (although that might be difficult to prove, because who keeps receipts for 10-20 years?) so I'm not actually making any profit. True also for somebody selling their own children's outgrown clothes, which will go for a fraction of what was paid for them.

We need far more guidance from HMRC on how they intend to work this. I don't think they're after true private sellers - but I do think we'll get caught up in the 'witch hunt'.

[ett1954]

@derbyram26 

Don't worry yourself over this.  You are decluttering; your sales history confirms this and as a 'genuine' private seller you have nothing to worry about.  You won't get caught up in a 'witch hunt'.   It is not a 'witch hunt' but an attempt to identify tax evasion which is a criminal offence.

HMRC will not be looking at every seller's sales.  Sales platforms have to provide HMRC with sales data from January 1st and HMRC's latest software will raise a red flag when whatever algorithms they have set are met.  Only then will an inspector pay any attention.  'Genuine' private sellers have nothing to worry about and they do not have to submit a tax return; unless of course you are lucky enough to make more than £6,000 profit on a single non tax exempt item for Capital Gains Tax.

Incidentally your understanding on the £1,000 profit level in your post above is incorrect.  It is £1,000 turnover before any expenses that can be offset against the sales are taken into account.

[suelel1968]

It is likely that online market places will have been asked to provide data in a prescribed format that can be easily fed into the super computer looking for anomalies. There will be millions.

They will want to meet target very quickly so they will consentrate on the biggest fraudsters first. Probably foreign traders not paying UK VAT.  Nobody can have a problem with that surely. 

[btr.style]

'From what I've read on here, according to some of the "You should be registered as a business" enthusiasts'

It sounds like you are trying to trivialise matters with that. People are annoyed and rightfully so. 

Business sellers pay a lot more money to eBay than private sellers. That's all very well if comparing someone clearing out their junk to someone earning a living from selling stuff. Yet often what's being compared is a business to a business. Why should I, or any other business pay £1000's more each year to eBay because we've acted within the law and trade legally, than someone who turns over the same amount of sales but does so on a private account and are trading illegally in 1 way or another?

Just to put that into perspective. We pay around £10,000 more each year in fees on our sales (plus shop and excess listing fees) than another business doing the same turnover on a private account using eBay's bi weekly fee promo. That's 10k less in my pocket of which some of it would go to me, some to staff and some as extra charity donations on top of what we already do. 

I'm sure in your place of work, if someone doing exactly the same job as you, a colleague, earned £10,000 more a year than you because your employer decided they wanted to pocket thay money off you to fund said employees extra wages, you'd be speaking out against it. 

I for one won't keep quiet when I'm 10k worse off each year than someone who is on a private account when they shouldn't be and I don't see why anyone else should either. 

[pamperandplay]

It's about time, i have a business account which is my main account and i have a personal account that i sell all my end of line stock on but i put both accounts through the business, even items i sell on Facebook i add through the business its not worth getting caught for, now i know some people do cash deals now and again and i can understand if someone wanted to do that but i dont sell face to face as i can not be bothered with all the headaches, but if people have been selling online with large amounts and not putting it through the books must be mad its amazing how fast sales to add up and if you haven't  declaired it then your at risk of a  prison sentence you might think im over reacting but i know people this has happened to plus it stops people buying fake stock or stock that simply should not be sold someone somewhere needs to get more of a grip and check certain sellers out anyway to make these platforms safer to sell and buy on and rules are rules, some people think they are entitled not to pay tax and have their cake and eat it when really they should be doing what's right 

[bits_n_bobs_heaven]

Major platforms like eBay & Amazon etc have been doing this for years! However, Vinted, Etsy, Preloved, Ebid,  etc haven't, so now they have the responsibility of providing HMRC with that information.

However, there seems to be great confusion over what makes a 'private' seller and what makes a 'business' seller.  A private seller sells their own used and sometimes new unwanted items / gifts. A business seller buys items whether in parts, pieces or whole items which they in turn put together and sell or sell as is usually without very little time delay between the two actions.

[btr.style]

I don't think there's much confusion?

It's as you say and quite easy for anyone to grasp. I'd probably say a very tiny minority don't think they have to be on a business account (a bit like how businesses can have personal bank account, they don't have to get a business one). A lot just won't want their address and details public but I'd say the majority are wrongly on private accounts because they want the fee promos. 

Money talks at the end of the day and there's countless posts online from traders on private accounts asking for advice/tips to avoid being on eBay's radar and being forced onto a business account as the private fee promos are making them decent money. 

[theelench]

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@btr.style wrote:

'From what I've read on here, according to some of the "You should be registered as a business" enthusiasts'

It sounds like you are trying to trivialise matters with that. People are annoyed and rightfully so. 

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"It sounds like I'm trying to trivialise matters with that."   

Only because you quote one part of my post and you should (at least) have quoted me as "enthusiasts........".   At the time of writing I had read two different accounts of what HMRC intended and was genuinely confused by the differences in those accounts.  I explain this in the full post.

My views on the subject of businesses masquerading as private sellers have changed a lot during the past year and on one thread I even suggested one possible way ebay could easily put a stop to their activities, or at least make a start in doing so.

Since seeing how serious a problem unregistered businesses are in some categories (particularly vinyl /CDs), I've also begun to think that "the enthusiasts" aren't doing much to help get the situation changed by jumping onto threads to question improperly registered businesses. 

Indeed, by questioning every seller who might possibly be a business, often for almost trivial trading activities, they could be said to be trivialising the issue, irritating other posters who (like I didn't) don't understand how extensive the problem is and by doing so, reduce support for getting any change by hitting out at the 'wrong' targets.

I don't think it helps get widespread support when again recently we saw another old lady pilloried for knitting a few sweaters and selling them.  When times are hard I think there is quite a lot of sympathy for those on low incomes trying to help themselves by selling odds and ends on ebay, correctly registered or not.  Whether they are operating within the letter of the law or not.  Many may ask themselves "What would I do" if I was in their shoes.

I think yours and other properly registered businesses understandable anger would be far more effective, raise far more sympathy and support if directed at those blatantly and obviously abusing private seller status, by pointing out those with 10,000 items for sale, a selling history of decades and FB in the tens of thousands.  

[tech-tonix]

I don't think it is sales turnover. My understanding is that the £1000 figure relates to "Gross Profit" - which for HMRC appears to be "raw" sale income minus (purchase/manufacturing cost of sold item + media/ad/transaction fees+delivery or postage cost). This is a summary or shortened version. Businesses can declare "expenses" outside of those "costs", which then reduce the tax liability but don't affect whether determination of the £1000 "hobby-seller" figure would affect a partcular Ebay/Etsy etc seller.  The definitive answers are within HMRC guidance or legislation wording but I haven't the time to dig them out

[tech-tonix]

I buy laptop equipment to re-sell, & the purchase cost, plus Ebay fees, delivery costs, packaging material, whatever goes into arriving at how much I gained or lost on each individual item is provided to HMRC as sale income less costs. I don't claim for the other allowances for heating, lighting, subscription to trade magazines or whatever, as I'm no longer trading at such a volume for it to matter. I have & do on occasion sell personal items, which I keep separate details for & advertise as "private sale".  I don't declare these details but could provide them if HMRC required. As long as the gross profit figure just mentioned does not exceed £1000 you don't need to register for self-assessment. They might pick up on you based on Ebay trading data, which means you just provide the figures you have retained, and the online self-assessment will work it out. It's actually very straightforward using the "cash-basis" option.

[papso22]

While you may be doing the right thing tax wise, selling end of line stock on a private account breaks a number of consumer laws and is against eBay's own policies.  It also gives you an unfair advantage over other business sellers who are using business accounts.

[kempseykate]

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@tech-tonix wrote:

I don't think it is sales turnover. My understanding is that the £1000 figure relates to "Gross Profit" - which for HMRC appears to be "raw" sale income minus (purchase/manufacturing cost of sold item + media/ad/transaction fees+delivery or postage cost). This is a summary or shortened version. Businesses can declare "expenses" outside of those "costs", which then reduce the tax liability but don't affect whether determination of the £1000 "hobby-seller" figure would affect a partcular Ebay/Etsy etc seller.  The definitive answers are within HMRC guidance or legislation wording but I haven't the time to dig them out

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That would be here:

Tax-free allowances on property and trading income - GOV.UK (www.gov.uk)

HMRC refer to as 'gross income' - which would be the amount you get before expenses. You can't actually claim expences on the £1,000 trading allowance.

Expenses if you're self-employed: Overview - GOV.UK (www.gov.uk)