HMRC to target etraders in 2012

December 5th, 2011  |  Published in Uncategorized

As a man is jailed for avoiding £420,000 in VAT by selling goods on eBay without registering, HMRC have announced a crackdown on those who trade on the internet as a business, without paying tax or VAT.

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.

To quote from HMRC’s website:

This will cover those who are using e-marketplaces to buy and sell goods as a trade or business and who fail to pay the tax owed. People who only sell a few items and who are not traders are unlikely to be liable to tax and will not be targeted by this campaign.

If you are trading regularly on the net, you may need professional guidance on whether you need to make a full disclosure now, and how to go about it. Don’t wait until a brown envelope drops through your letterbox! Waiting for them to find you could cost you dearly in penalties.

Regular trade is defined through specific criteria known as the “badges of trade”, including regularity, buying and selling for profit; profit motive and the quantity of goods or services sold. Registering with HMRC is compulsory but does not mean you will pay tax or NIC automatically – it depends on the profit which you make, after allowable expenses.

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