The recent case of Mr Woolfenden, a Bolton man sentenced to 2 years’ imprisonment for not declaring his eBay trading profits to HMRC, whilst a little extreme, highlights the need for anyone trading on eBay or similar sites to ensure their tax affairs are in order.
In this case, the tax at stake was £300,000. However, HMRC are getting smarter about tracking down online traders and will be pursuing much smaller scale traders as well as the larger ones.
Anyone trading online who has not declared the income to HMRC should take advice as soon as possible. It is much better to make a voluntary disclosure to HMRC than for them to find out about it and approach you.
The first question to address is whether you are trading or not. There is no hard and fast rule. If you have just sold one thing then you’re almost certainly not trading. If you are selling regularly and perhaps buying things to sell on, then you are almost certainly trading. Many people will be somewhere in between the two and should take advice about their tax position.
For advice on this or any other tax issues contact Jane Parry firstname.lastname@example.org or any member of the PM+M tax team.