Online Traders Urged to Comply with Tax Rules
31st May 2012
People who make money using online marketplaces such as eBay and Amazon Marketplace are being advised to ensure that they’re complying with tax rules.
Traders who use such marketplaces are still required to submit tax returns and pay tax on the profits they make, just as they would if they were trading from a shop or market stall, says Andy Severn, Head of Taxation at accountants and tax advisers Duncan & Toplis.
Her Majesty’s Revenue and Customs (HMRC) sees this as a risk area and believes that many online traders are not declaring the income they have earned.
As a result they have launched a campaign targeting traders who use e-marketplaces.
Until 14th June 2012 online traders have the chance to voluntarily disclose to HMRC that they may not have declared all of their earnings. The benefits of notifying HMRC now are:
- In most cases HMRC will only go back no more than six years when arriving at the assessment
- Penalties for voluntary disclosure are more favourable than for prompted disclosure
- Those affected can pay their underpaid tax by instalments
“We understand that HMRC has requested information from a number of websites about their subscribers in order to target those individuals who may be avoiding their tax compliance obligations,” said Andy.
“If you have earned money using online marketplaces and haven’t declared that income for tax purposes it makes sense to act now, since settlements for those who make a disclosure are likely to be less onerous than for those who do nothing and hope for the best.”
The deadline for traders to notify HMRC of their intention to make a disclosure is 14th June 2012 but the actual disclosure need not be made until 14th September 2012.
Only traders are affected by the latest HMRC campaign – users who sell on items will not usually be covered by the provisions since they are not classed as trading.
If you would like to discuss this matter further please visit www.duntop.co.uk and contact your local Duncan & Toplis office.
Notes to editors
Duncan & Toplis was established in 1925 and has since grown into one of the largest independent firms of chartered accountants in the Midlands.
Duncan & Toplis appears in the top 30 UK accountancy practices list published by Accountancy Age magazine.
The company has 10 offices throughout the East Midlands: in Grantham, Boston, Lincoln, Louth, Melton Mowbray, Newark, Skegness, Sleaford, Spalding and Stamford.
Duncan & Toplis offers a wide range of services to small to large-sized family businesses, from accountancy, audit and tax to payroll, human resources and computer services.
The business employs around 300 staff, of whom 85 are currently engaged in professional training.