Here’s what you need to know
HMRC is imposing increasingly harsh penalties on small scale “eBay” style internet traders who underpay their tax says Moore Stephens, the Top Ten accountancy firm.
An analysis of recent fines against online retailers for unpaid tax amongst what HMRC calls “deliberate defaulters” found they faced penalties, on average, of 59 per cent of the tax owed (payable on top of the underpaid tax). The normal penalty is around 35-50 per cent of the tax owed.
Moore Stephens says that these heavy fines show how HMRC is no longer cutting internet traders of goods any slack.
Examples of these types of cases include:
Moore Stephens says that many small scale and individual online retailers using outlets such as eBay, Amazon and Alibaba may be unaware they have to pay tax on their online trading, or believe that their earnings are so small they will fall under HMRC’s radar.
From April 2017, online retailers are allowed to earn up to £1,000 annually without being taxed, but many are rapidly outgrowing that exemption.
Dominic Arnold, Partner at Moore Stephens says “HMRC has given due warning to online traders that they are in their sights.
“In HMRC’s eyes there can be no excuses for not declaring online businesses – HMRC are cracking down on them with full force.
“However, many sellers might not consider the fact they should be paying tax and are not even registered with HMRC.”
Wed, 16 May 2018