Ebay users targeted in HMRC crackdown
HMRC have announced plans for a crackdown on unreported income from Ebay and other internet trading sites.
This is covered in Principles of Taxation on the Test of Competence course when we look at Badges of Trade.
People trading through Ebay and other online sales sites such as Airbnb are facing a tax crackdown following Government plans to obtain data on millions of internet transactions.
It is thought that billions of pounds in tax is lost each year through unreported online income.
Since 2013, HMRC has had access to credit and debit card data. Now HMRC is hoping to be able to extend this to collect information from PayPal that would allow it to identify British users who have an income from online sales.
This will include Apple and Google app stores sales, and money made by renting out property through sites like Airbnb.
HMRC will apply The Badges of Trade tests to determine whether someone making an online sale is carrying on a trade and hence has a tax liability. Infrequent sellers are less likely to be seen as trading.
For students covering tax we have several resources, including a tax penalties infographic.