The Government recently published its draft Finance Bill 2016. You can find out more on gov.uk about this wide ranging bill.
But down in the details I found a small amendment that will be of interest to anyone trading online using a marketplace such as eBay and payment providers such as PayPal. It’s billed as “Tackling the hidden economy: extension of new data-gathering powers“.
Legislation will be introduced in the Finance Bill 2016 that will amend the Finance Act 2011 by adding two new categories of data-holders that HMRC will be permitted to serve notice on to get information.
The new categories are: business intermediaries and electronic payment providers operating digital wallets.
As the policy paper notes: “These measures will give HM Revenue and Customs (HMRC) the powers it needs to tackle the digital hidden economy. They provide HMRC with a new power to gather data from business intermediaries who facilitate transactions, particularly online, and electronic payment providers who operate digital wallets. HMRC will then be able to compare that third party data with its own information to identify those businesses who are failing to register with HMRC or are not declaring the full amount of the tax they owe.”
It’s expected that by 2020, the new powers will help HMRC an additional £285m for the Government’s coffers.
The Government adds: “These measures are expected to benefit compliant businesses by ensuring a level playing field between those businesses who comply with their tax obligations, and those that do not.”
And, obviously, if everything is in order there’s not much for any seller to worry about. And this could be a useful power in tackling the issue of overseas, often Chinese sellers, who aren’t complying properly with VAT rules. But then, if you’re playing fair on your tax then how would you feel about HMRC poking their nose in and getting all your sales and payments records?
But a few questions are worth considering which we’re not clear about. eBay and PayPal’s previous position was that if HMRC came to them with specific requests on individual accounts then they would provide such requested information. But could this new power be used to get blanket info about all sellers? Could they potentially get the full sales records of all eBay sellers if they wanted? Or will they still need to approach it on a case by case basis? Not sure.
And could this move beyond tax evasion into the automatic inclusion of eBay and PayPal (and other firms) data into the ongoing digitisation of tax returns? It’s not inconceivable in the years to come that your sales could almost automatically be pumped to HMRC for inclusion in your tax return. A long way off perhaps… but once government has a power, it’s very hard to rescind it.
10 Responses
someone needs to tell HMRC about goofbay to save them an awful lot of trouble LOL
Do you really think they dont have the ability now ? its just manpower they lack
We received a shake down by HMRC in 2013.
Four hours spent going over our monthly sales records on Ebay and Paypal over the previous 5 years.
We downloaded everything to disc each month, so we had them ready.
The reason for this pleasant visit?
Ebay’s “fee record” led them to believe we were cheating by £40,000 per year.
Completely baseless and, after failing to find anything amiss, the HMRC man withdrew gracelessly.
But we still had to “disprove” the nonsense they came up with before we were in the clear.
So, my friends, expect more visits from HMRC, based on the completely daft interpretations by them of what Ebay fees relate to in terms of sales.
Even if they get these extra records, you can be sure they won’t understand them.
The fact that you are legit and make vat and self-assessment returns makes it MORE likely you will get a visit.
Much easier than tracking down those in the black economy.
What amazes me is that many government or other official documents which ask legitimate questions about your finances, don’t specifically mention ebay and paypal accounts at the moment – I’m thinking about stuff like housing benefit and working tax credits.
Someone claiming either of those can easily say they didn’t realise they were meant to be declared, as there’s no mention of either of them on the application forms.
I’ve overheard some ebaying mums in the school playground brag about how their ‘hidden paypal earnings’ are paying for all sorts of stuff without going near a shop or bank account, all thanks to paypal being widely accepted nowadays.
More power to HMRC’s elbow – but only £285m. Surely it is more than that with all the VAT avoidance from Chinese sellers? I welcome this. Even if you do get an inspection, rather that than other sellers getting away with tax fraud. It is always likely they will call if they have reason to believe there is a major issue, and that is what they should do.
Yeah, I’ve always thought they could do [most of] this already. A few years back they declared they were doing a pogrom on all eBay undeclared business sellers – this isn’t all that different by the looks of it, unless of course they were bluffing (Govt departments lying? Noooo!) back then.
But as you say, if all is in order there’s nothing to fear…but that’s what all authoritarian governments say 😉
It just shows that the UK gov will do anything they can to get as much profit from the small people, to pay the running costs of the USURY system in the UK 406% external debt.
However the biggest problem for HMRC is not the seller selling 1 or 2 items on ebay every year, it is the chinese sellers which dominate ebay sales, and they pay 0% VAT + tax to the uk economy and the CCP will no way share there own people’s information with foreigner organisations such as the HMRC. This shows exactly how incompetent the UK gov really is.
What the UK gov needs to be doing, is CUT the government employees by 50% welfare and social by 75% and encourage small sellers and put a duty on foreigner IMPORTS and remove from the EU. But do not worry, they shall never do this, they rather allow the UK to go bankrupted before they do anything like this. This is the reason why the UK is finished 🙂
What if you have a paypal account registered in USA/China even better hong kong and are conducting massive amounts of fraud via UK fulfilment centers. That address is then not registered under a UK address, only the item is shipped from one.
Nothing….. You get away with it and carry on regardless. Pure gold !
https://www.youtube.com/watch?v=dMfb9TRbUJc
I dont want to pay tax on items sold, So ill carry on regardless !