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On-line traders: Amnesty reminder

Following on from our last post, we remind you that the HMRC amnesty to online traders is still open but closes next month.

Under "The e-Markets Disclosure Facility", online marketplace traders can pay the tax they owe and benefit from lower penalties available to those who come forward rather than wait for HMRC to catch up with them.

On announcing the scheme, Marian Wilson, head of HMRC Campaigns, said "This campaign is part of a wider HMRC initiative to provide support and guidance to the public on tax evasion and is aimed at people using online marketplaces to buy and sell goods as a trade or business and who fail to pay the tax owed. Those who only sell a few items and who are not traders are unlikely to be liable to pay tax on what they sell and will not be targeted by this campaign. Our aim is to make it easy for online traders to contact us and make a full disclosure of income, thereby putting their affairs in order".

Under the opportunity, online marketplace traders can come forward at any time between 14 March and 14 June to tell HMRC they want to take part. They then have until 14 September to give details of the tax owed and arrange for full payment, including any interest and penalty due. If they make a full disclosure of what they owe before 14 September, some will receive no penalty at all, with most receiving a penalty of no more than 10 per cent of the tax owed.

If you deal in goods online, a key issue is whether you are trading or not. If you are selling items that are part of your home and chattels, you will not be regarded as trading. Any profit you generate from this activity will not be taxable. However, if you are buying goods to sell on, whether in the same condition or altered in any way (for example refurbished or separated into smaller units), you are likely to be regarded as having a trading activity and the profits will be potentially taxable. In such circumstances, the key issue is to consider whether your profits, when added to all of your other income, exceeds the personal tax allowance, which currently stands at £8,105.

If you are in any doubt about your status and you have an online presence, be aware that HMRC are monitoring activity. You should seek professional advice as soon as possible.