Should eBay and PayPal hand your sales data to the tax authorities?

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There’s been much talk recently both in the UK and in the US regarding eBay, PayPal and the tax man. The big issue is should eBay and PayPal hand across sales data and seller’s details to the authorities to ensure that any taxes due are paid.

In the UK the issue was sparked by the story in the Daily Mirror of a seller who is allegedly not paying VAT, even though they are well above the VAT threshold. It’s been suggested that it’s down to eBay to ensure that sellers are registered as businesses, are registered for VAT if their sales exceed the VAT threshold, and that it would create a level playing field for all ensuring no one is disadvantaged by being forced to compete with sellers who aren’t paying their dues.

Taking a contrasting view in the US sellers are outraged that PayPal are to be forced by new legislation to hand over sales data for any merchant who’s transactions exceed $20,000 and 200 transactions to the IRS, the US equilalent of HMRC.

Many US sellers have been concerned that PayPal would hand over data for merchants trading under those limits, and again worry about the requirement to enter their tax details into PayPal.

Whilst in the UK sellers are clamouring for more openness and transparancy between the tax authorities and eBay and calling for eBay to make sellers demonstrate that they’re registered for tax in the US the reverse appears to be true with sellers wanting to avoid paperwork.

It’s fairly well known that a spider called Xenon has been available to the tax authorities for years. Xenon can crawl sites like eBay and collate transactions and tie user ids together when they’re owned by the same person. Also data is readily available from research companies such as Terapeak so trading on eBay is very transparent and it’s practically impossible to hide once an investigation into your affairs begins.

If the tax authorities suspect that you’re underpaying or avoiding tax once they start digging they’ll very quickly establish what taxes were due from eBay and PayPal records. It should be noted that eBay have *always* fully cooperated with tax authorities when information is requested on a specific individuals activity on the site.

So what do you think? Should eBay be proactively responsible for ensuring sellers on their site are paying relevant taxes? Where should the lines be drawn? It’s easy to say if you turn over more than £70k per year you should be registered for VAT, but equally many sellers have other income or even multiple eBay accounts so should reporting limits be lower? Would it be better for PayPal to ensure registration with the tax man?

At the end of the day all companies should be paying any tax due in which ever countries they reside or trade in. But who’s responsibility is it to ensure that they do, the trader themselves, the marketplaces they trade on (and does that carry through to ISPs hosting ecommerce websites?), or is it ultimately the responsibility of the tax authorities to ensure all taxes due are collected?

65 Responses

  1. Legitimate sellers will not have any issues with that.

    Given that VAT is due on a purchase, eBay do not make it clear to buyers at what point VAT is due on the purchase. Its either at the point of sale or at the point of delivery. And if at the point of delivery what admin charges are likely as a result.

    And overseas sellers should pay UK tax on profits generated out of UK sales. Curently they don’t. In fact eBay don’t even recognise overseas sellers as being business sellers in many cases!

    There are so many flaws currently that is is every UK citizen that looses out.

  2. If a genuine business seller is registered on EBay and they pay their Tax and Vat they have nothing at all to fear from Ebay giving any information to H M Revenue & Customs.

    The whole problem with Ebay is that is flooded with illegal sellers mainly from China and Hong Kong, who simply register an account with Ebay for the sole purpose of defrauding H M Revenue & Customs and keep all profits.

    This is unfair to the genuine UK sellers who play by the rules, these illegal selles can simply beat any genuine UK seller on price by not paying any import duites or VAT and do not charge VAT or Tax on their sales.

    With Ebay own Powerseller programme, you have to achieve a monthly turnover to quailfy, if Ebay insisted these sellers proved their VAT registration number (Copy of VAT certificate with trading name on it and number) and this matched their business details on Ebay. If a limited company copies of incorparation. Ebay could prove address existed, also contact by telephone and post aswell to verify address and details.

    No PO Boxes Mail Forwarding addresses should be acceptedaccepted.

    The main thing Ebay should do, is to ensure these sellers have a UK Bank account, as Amazon do, this is why all the largest sellers on Ebay (illegal sellers do not sell on Amazon because Amazon state you must have a UK Bank account)would then come under UK Banking laws aswell. Not a lot of hope their really the shambles they are in?

    If a item is sold and sent from within the UK it is subject to UK Tax & VAT, regardless where a seller is based.

    If you look at he post on here (Tamebay) regarding the story by the Mirror Newspaper, there are plenty of reports of illegal sellers who still have listings on Ebay despite no buisness details no vat number etc, Ebay are only concerned about thier fees and profits, not if any sellers complies with UK Tax and VAT.

    Most genuine sellers, will register for VAT so their fees and final value fees are net of VAT.

    Come on EBay UK, help genuine UK sellers take action against these illegal sellers.

  3. The first story “Daily Mirror exposes VAT tax dodger”

    If the seller they exposed in the above story was a legal seller I would have thought they would have proved straight away they were a legal company to both the Mirror and Ebay.

    Will H M Revenue & Customs chase the seller for the loss of Tax or VAT or sue Ebay???

    With a estimated turnover of £1.5 million pounds a year, you would not want to lose that turnover and profits if you was legal??????????????

    Just proves how easy it is to beat HM Revenue & Customs and Ebay Rules.

    There is at least 6 others sellers on Ebay who turnover as much and all are Chinese, when will they be exposed?

    Think of the loss of VAT & Tax to the Treasury, and what the Treasury could do with the money!

  4. I would go further, let Paypal take a witholding tax of 20% of all income, legitimate sellers can offset this against Tax/Vat, other sellers such as those feom China and unregistered UK sellers would suffer
    Would probably raise a £1bn or so

  5. It’s all nonsense. The Inland Revenue are understaffed and don’t have a clue what they are doing. If ebay had to hand over all the details then it would just clog up the Inland Revenue’s system. Ever tried phoning them? Once they even thought they owed me money!

  6. With the ease to open ebay accounts worldwide this type of legalisation would be difficult to manage to say the lease.

    Beyond ebay insisting VAT info is provided for accounts turning over £70k + per annum & all UK businesses using a UK Postal address (possibly checked electral details, for account that are +£70k), I cannot see how this would work.

    I also cannot see ebay effectively becoming part of the HMRC collection agency (supplying T/O details) willingly, as there’s no profit for them in it & indeed having to sanction money making IDs would not be in their nature.

    This would also be very long winded, researching 1000s’ of sellers just in the UK, when to go after the likes of Mr Green of BHS fame would/or could gross great lumps with 1 swoop.

    Ebay have only themselves to blame for this bad publicity as they allow sellers from china etc’, to trade unchecked on sites all over the world & openly display contempt for their system.

    WELL DONE once AGAIN EBAY….

  7. I run a small limited company with the turnover below the VAT threshold (at the moment), and I have nothing to hide. My little company tops up my pension and if HMRC want to look at my accounts they are welcome to do so. My concern about ebay and Paypal getting in the Mix is that they are basically bloody useless and would almost certainly mess up.

    They would almost certainly do more harm than good, no matter how good the idea is.

    Who knows they might even invent another pointless DSR mark for compliance with HMRC

    Ebay do yourselves a favour – let sellers sell, let buyers buy and just leave alone!

  8. I vote for sanity.

    @david Expecting eBay or PayPal to collect, withold and then remit taxes? Who pays for this? Employees would be needed. Under what authority do they do this? Are we, sellers, their employees? That would blow an interesting hole in the ‘only a venue’ defense.

    Can you imagine the sheer volume of paperwork for the tax authorities whether in the UK, the US (federal, state, city) or anywhere else as they try to correlate taxes withheld with taxes due on a gazillion transactions and (according to eBay) 93M active users who sell.

    I am in business. I keep books. I am also smart so I don’t mess with Uncle Sam. I don’t want to pay one cent more than I have to so I keep very accurate books and I pay an accountant to go over my books in case I make a mistake.

    I have absolutely no problem having my transactions reported.

  9. Lets not beat around the bush with this idea.

    If the will was there eBay would do it.

    Whats it going to take for a member of staff to press a button and print off data and send it to the authorities?

    eBay can then say they have done their bit and its now up to the authorities. End of story.

    But the fact is the will is not there.

    And why is this?

    eBay have got too much to loose.

  10. A proactive approach by eBay would deflect all the criticism to HMRC.

    eBay claim to be market leaders with 25% of all UK online sales. Its about time they showed some leadership!

    Maybe Vince Cable could get involved now he has time on his hands?

  11. As much as I am sure the govt could use the money, the HMRC cannot cope with the “everyday” tax dodgers.

    there is no way they could cope with the sudden influx of information.

    tis a good idea but the practicalities make it a non starter IMHO

  12. Companies should not be involved in policing the tax system, more to go wrong. eBay make plenty of mistakes in policy, administration and coding of the site I can see plenty of potential for serious error and you can bet no one will take liability. Sellers will pay for the errors, like no income for months because a suspected issue has been flagged.

    Foreign tax evaders can relatively easily be identified and they should be dealt with, in theory at least the tax system is meant to work for the benefit of UK citizens.

    As has been pointed out the rich avoid many more taxes indeed the system is set up so that the poor pay and the rich don’t with their many tax avoidance schemes, offshore accounts etc. Start with the expenses fiddling politicians, start at the top, those meant to set an example, those who should be setting example.

  13. Look at this way. The prices (your cost) will go up when the tax man starts collecting. The result is that governments will spend part of your money on more bull shit

  14. I think that it is in the best interests of the ebay community in having more controls on certain sellers, but at the same time dread to think what sort of mess ebay could make of the whole system knowing the problems when they try and implement new things! There are many sellers on ebay who do not reach the VAT threshold or sell items with no VAT on them.

    If HMRC wants to find out information, it can do and I’m sure it has enough to do without chasing international sellers who have selected that they are members of ebay UK and making them pay VAT.

  15. A lot of the decisions made by eBay in recent times have been very poor, this on the other hand I think is excellent.

    It’s about time they clamped down on traders living secret ‘profitable’ lives without due process. It makes me sick that a large percentage of these people will also be claiming the doll.

    Now if only eBay could do something similar with counterfeit products we might be getting somewhere…

  16. You are responsible for paying your own taxes.

    The HMRC very kindly remind you to do so and punish you if you do not.

    This is true on and off ebay, so I fail to see where Ebay has any responsibility.

    Of course taking ebay out of the loop demishes the story and you end up with “Chinese Person Doesnt Pay Taxes” sensation!!

    not got quite the same ring to it has it??

  17. Seems odd that the biggest seller the Mirror has exposed TRUSTSALEUK changed their name yesterday too GBMSALE and removed all their listings.

    Link to Mirror story below;

    https://blogs.mirror.co.uk/investigations/2010/12/more-ebay-traders-caught-selli.html

    Why on earth would a seller selling in excess of £9 million pounds worth of items change their name and pull all their listings, if they had nothing to hide?????????????????????????

    When will Ebay and HMRC stop this!

  18. How do the buyers give eBay a bad name? How sellers give eBay a bad name is very obvious (to me).

    …Well, in a number of ways. Sellers are very vocal about the number of buyers who claim falsely their item hasn’t arrived. If more eBay buyers were honest, this wouldn’t happen.

    The stupid way a buyer makes a purchase, confirms that purchase then messages saying their cat/dog/blind nan accidently bought the item, then when you send them an aggrement to cancel they refuse it, costing us money.

    The stupid way a buyer makes a purchase, takes a week to pay, then negs you 3 days later because their item hasn’t arrived yet.

    The stupid way a buyer buys 3 things on eBay, receives your item fine but “accidently” leaves you the neg meant for the other item they bought, you send them a feedback revision request which they ignore.

    A buyer buys 5 identical items from you, then messages saying their computer froze and they only need one. You send them cancel transaction requests and…yes, you know what happens next.

    A buyers makes a purchase, selects the cheapest shipping option, then messages saying they need it in 2 days and don’t mind paying extra…Really then why didn’t you!

    I love eBay really, and to all those blind nans, dead pets/relatives, sick neighbours, flooded houses, 3 year olds etc I wish you all a merry Christmas!

  19. Here are their business details:

    Global Phoenix Computer T&S, Inc.
    P. O. Box 3959
    Ithaca, NY 14852-3959, USA

    It’s displayed very clearly on their Aboutme page.

    And here is their website:

    https://www.globalpct.com/index.asp

    They seem quite genuine to me, however like everyone else, I haven’t seen their accounts so I can’t really accuse them of any wrong doing.

    DFS, Currys, PCWorld all claim NO VAT at this time of year on their sales, it normally means the VAT portion is discounted by the seller not that it isn’t paid at all.

    I think this is becomming a bit of a witch hunt…and usually once you become concerned with what other businesses are doing you forget to keep an eye on your own.

  20. yes i say tax everyone on ebay lets fill up the the government coffers god knows its needed,its getting tough for lying thieving mps to hide their actions when they rip it off

  21. Thank you Global Phoenix for your kind words. SAD

    Sad maybe, but how sad it is that you do not comply with Ebays own rules and UK trading laws?

    You state you pay the VAT, thats fine what is your VAT number?

    And will you provide VAT Invoices with all future orders sold?

    It is a legal requirement that if you charge VAT regardless if you pay the VAT or the Customer does, you should display your VAT number on your listings, will you now put your VAT number on all your listings?

    Its also a legal requirement that you show your full business and contact details on your lsitings. You state items sent from Manchster will you now show your business and contact details on all your lsitings?

    One would presume if you are a fully legal UK registered business you will now amend all your listings to comply with both Ebay and UK trading laws, as you would have nothing to hide by complying with these legal requirements!

    Enjoy the rest of the festive season, and by the way just to let you know the VAT rate here in the UK goes up to 20% on the 4th of Jan.

    Sad Peter

  22. I do not believe ebestdeal4u are genuine business, main reason – they are hiding their real business address behind a PO Box address. Firstly any online business need to display their real address (not po box addresses) and secondly it makes you think why they are trying to hide their real address. Maybe this will make things clear.

    Their turnover: 1 Year (24/12/09 to 18/12/10) – £664345
    VAT @ 17.5% – £116260
    VAT @ 20% (2011) – £132869

    eBay fees (9% average) – £59791

    By displaying correct business details (i.e. VAT Number, if you are really VAT registered) one would save £8968 on the VAT element of above ebay fees.

    So if you are VAT registered then why would you not show your VAT number?

    No matter where the business registered, any goods in UK at time of sale are liable to all UK tax.

    I am sure Nick from The Mirror would take this seller on board. Note – that any seller looked at by Mirror will be investigated properly because as far as I can see they investigate all sellers and have the resources to do the same for many.

  23. O!! – I also have been looking at some sellers since Tamebay has started a thread on this. I will post details that I have soon – when I have some time. ‘me’ – good work.

  24. If you are a business selling on ebay, you should disclose your VAT number. You are liable to UK tax and VAT fees and should comply. But a note to HMRC, you should also be checking up on these sellers that are not paying! Is it really fair on the smaller people that are? hmmmm, hmmmm?????

  25. As stated in my last post. This seller has done turnover of nearly £450,000 (nearly half a million).

    eBay ID’s:

    macrobolous
    bpsworld1
    pro_3c_online

    what should happen in this case?

  26. The problem that I have is that Pay pal and ebay are exempt from banking laws, and operate as they want. If the gov is going to take taxes, then they should place pay pal under the banking umbrella and force them to adhere to the truth in lending act (US) and other banking legislation

  27. An account linked to famous BOBOB_UK has sprung up on ebay again.

    eBay ID: christgift
    Link: https://stores.ebay.co.uk/ChristGift-Shop
    1 Year sales figures approx: £77000

    Note – it does not matter if you have one account or a million accounts – your total turnover must not exceed 70k without having a registered VAT number.

    They had been off since 9th December 2010. Do they think they would simply be able to start selling again after staying quite for nearly a month?

    Note – no VAT number still showing on any of their listings.

    Are concrete steps going to be taken?

    Paypal is not a bank which is a shame, else all of these money laundering loop-holes would be closed for sure.

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