HMRC to target VAT defaulters on eBay

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I’ve often heard complaints that some eBay traders appear to be operating above the VAT threshold without being VAT registered. Now it appears that HMRC suspect the same as they are planning a VAT initiative starting June/July 2011 to focus on individuals and businesses operating at or above VAT threshold who have not registered.

HMRC will use cutting-edge tools such as “web robot” software to search the internet and find targeted information about specified people and companies. Using the software, the department can pinpoint more accurately people who have failed to pay the right tax. The “web robot”, used with the department’s Connect computer system, also helps find people who are trading without telling HMRC.

Connect alerts HMRC to previously invisible tax evasion by matching a vast amount of HMRC and third-party data, enabling a fast and focused response to tax evasion. It shines a light onto previously hidden relationships, uncovering anomalies between such elements as bank interest, property income and lifestyle indicators before homing in on unexplained inconsistencies.

As well as specifically targeting eBay and other online marketplaces HMRC will also be targeting tutors (including fitness/dance/lifestyle coaches) and tradesmen, because of their ability to hide secondary sources of income.

HMRC are currently discussing discussing the design of the voluntary disclosure opportunity for which it’s expected a partial amnesty will be offered, with any penalty capped at 10% to 20% of the tax outstanding over the last five years. However for those that fail to act will face fines of 35% to 100% of the unpaid tax. Of course in either case the tax will still be due.

“By being open about our areas of interest for the coming year we hope to maximise that exchange of information and ensure we reduce the tax gap and help customers pay what they owe. We will use the information we gather to pursue people who choose not to use the opportunities we provide for them to put their affairs in order on the best possible terms. It will be more expensive if we come and find people, so I urge them to come forward and disclose voluntarily.”
Mike Wells, HMRC’s Director of Risk and Intelligence

If you are trading above the £73,000 turnover threshold then the best advice is to contact HMRC and register immediately. Sure you may be fined if you owe back taxes, but those caught later in the year will be fined a lot more.

38 Responses

  1. they could not cope if the caught everyone on the fiddle,

    “such elements as bank interest, property income and lifestyle indicators before homing in on unexplained inconsistencies”

    have a vast overdraft, no holidays, work from a shed in the garden
    I am safe lol

  2. Re; ‘have a vast overdraft’

    Low income Large overdraft. The 2 do not go together.

    Re; no holidays

    Just not abroad, but another house by the seaside??

    Re; ‘work from a shed in the garden’

    My Shed is 5000 sq ft.

    Re; I am safe

    You Hope
    , ,
    Re; ‘lol’

    Only they will have the last one.

  3. Sling the lot of the tax dodging sods in jail because I loath them all, I loath this country full stop! I’ve spent my whole life forking out dosh in tax on deadbeats who just create another generation of deadbeats. I hope the HMRC crush them all.

  4. We work hard to pay the tax we owe, and we support HMRC bringing everyone up to the same standard. This release does sound a little like bluster to me, reminiscent of the TV detector van scares, but no-one welcomes an inspection: the distraction from running a business is enough to be costly.

    I do, however, wish that the rules weren’t so fiendishly complicated: despite best efforts to comply, I’m sure that the best makes mistakes here and there, and all you can aim for is to not make any materially large errors.

  5. we work hard to avoid paying the tax we owe as does just about every one and his dog if their truthful,
    the taxman knows this thats why he has inspectors

  6. Bring it on – bout time they did this, thats why some of our competition can undercut us – they dont have to do a VAT return.

    I leval playing field I say

  7. When i see it, ill believe it. This is scare mongering. Same as the offshore bank accout and tax haven nonsense. A few small fish got caught in the net, the rest swam past. !

  8. What’s the rules on overseas based traders trading through a UK market place with regard to tax/vat?

    Would it be possible for HMRC to request that eBay automatically flag up accounts when a certain level of turnover was approached/reached?

    Could eBay be doing more to educate it’s sellers and highlight the importance of keeping on the right side of the law (trading standards as well as HMRC)?

  9. Laws change over the years, once it was quite legal to shoot a man at dawn..try it nowadays and see what happens.

    There are those that make the law and those that abide by it.

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