Many eBay sellers up and down the country have been receiving the HMRC e-marketplaces letter and wondering why. If you’re a fully paid up member of the tax paying community making full disclosure to HMRC, paying your VAT, Corporation Tax, National Insurance and Income Tax why did they bother writing to you?
The explanation appears to be that HMRC simply fired out letters to everyone they know to be trading online. Doubtless they’ll find a number of people who are either behind with their tax or hiding, but there will still be thousands of traders who didn’t really need a letter.
The first question we at Tamebay asked is where did they get the data from? We asked a number of people, and when I received a copy of the HMRC mailing I rang up and asked again. The only marketplace they could have got my address from was from eBay and HMRC frontline staff simply stated that they “got the file of names direct from the e-marketplaces”. It seems strange that they didn’t also get my VAT number which is freely displayed alongside my name and address on all my eBay listings and eliminate me from their mailing.
Did eBay or Amazon hand your details over to HMRC?
eBay have told us that they “haven’t handed over seller data to HMRC”. That’s no surprise but we had to check. For the past 15 years eBay have refused to hand over seller data en masse to authorities around the world and for good reason, it’s incredibly valuable and confidential and if it fell into the wrong hands would totally compromise their business. Any competitor would have a field day if they had the 180,000 eBay UK business sellers’ names and addresses to market to.
Amazon take the same stance as eBay, there’s no way that they would hand over their entire seller database without being dragged kicking and screaming through the courts.
Cross checking data and cost of the HMRC e-marketplace campaign
It appeared to us that HMRC could have saved a substantial amount of money on postage, production of letters and call center time if they’d simply cross checked the data they’d gathered with their database of tax payers. The letters explain that if you’re up to date with your tax you don’t need to do anything but that leaves the cross checking to be done at a later date. The alternative is that HMRC will start chasing everyone they wrote to at some point in the time.
I’d recommend that if you receive a letter you give them a call and confirm your tax references to save being chased in the future. I suspect HMRC would quite like you to do this but didn’t say so as it would simply flood their hotline with calls.
HMRC response to Tamebay
An HMRC spokesperson told us:
HMRC gather information from a large number of sources including: online advertising, seller rankings, our hotlines, and from the eMarketplaces themselves where UK and EU law allow it.
Customers trading on eMarketplaces who are behind with their tax still have until 14th June to come forward and let us know that they want to put their affairs in order.
We wrote to as many people as possible in May who we knew to be selling on eMarketplaces, to let them know about the opportunity. The letters explain that if their affairs are in order, they need do no more. We wanted to do this well ahead of 14th June deadline so that customers would still have time to act if they needed to.
Since the letters were sent we have gathered more information and now hold data on over 100K people. HMRC are assessing this data, and we will begin contacting customers who have chosen not to come forward after 14th June, if we have reason to believe they owe tax.
This campaign is intended to give anyone owing tax an opportunity to come forward and clean up their tax affairs and avoid the full penalties that normally apply for late disclosure, intentional non-disclosure or late payment. HMRC probably gathered the majority of their data from “Seller Rankings” or in other words scraping eBay for Business Seller names and addresses.
It’s likely that it’s cheaper and more effective to simply mail all (or a large proportion of) online sellers than to cross check the data prior to mailing. It’s also probable that some businesses trade off-line and use marketplaces for disposal of distressed stock and may not have been fully disclosing their online sales.
This is just the start of the campaign and it’s still in it’s awareness stage. HMRC aren’t going to chase you before the 14th of June but time is running out if you are behind on your taxes and haven’t contacted them yet. From that date onwards expect them to start chasing down anyone that they wrote to that hasn’t taken the time to call them.