Tax-man targets eBayers, tutors,coaches and sparks

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HMRC is looking to eBay traders, tutors and electricians over the next few months. Should someone you know be concerned?

Nobody likes paying tax – but it’s just part of being a proper member of a civilised society. What many people dislike, though, is that we all have to pay more tax because some people don’t pay what they should.

HM Revenue & Customs (HMRC for short) is tasked with dealing with those people who have not, so far, paid the right amount of tax. Those people are sometimes offered the chance to come forward voluntarily. Almost without exception coming forward like this means you get an easier ride from HMRC. It will also normally cost you less than if they come to you.

This last four or five years HMRC has taken to having targeted campaigns – aimed at sections of the population and trying to get tax evaders to come clean. I can now update you on the next few campaigns HMRC is planning.

The current campaign is to allow tutors and coaches, who have not declared all of that income, to come clean. They must register by 6 January 2012 and submit full details by 31 March 2012. Get the HMRC links to read about this here.

Other campaigns coming in early 2012 include

  • eBay traders, and
  • Electricians

The eBay trader initiative is perhaps the most interesting one, and the one which could affect quite a few people. For many months now HMRC has had a computer system (they refer to as a ‘robot’) examining eBay transactions and looking for people doing a lot of trades. Of course they will be concentrating on those selling a lot, but I suppose someone buying a lot could also be of interest if HMRC thought they were going on to sell those same things.

What HMRC’s robot is doing is gathering a heap of intelligence about dealing going on in eBay. For years HMRC has felt that they were losing out on tax from people effectively running a business though eBay and other E marketplaces and the apparent anonymity that these places gave the seller. Now they have decided to go after those people.

They have not even firmed up exactly how they will do this, and the people targeted may or may not be offered a chance to come clean with a reduced level of tax investigation or penalties. The detail should be firmed up early in 2012. Remarkably on their website HMRC asks that any person or organisation that would like to contribute to the campaign design to email them. How terribly open!

Which eBayers should get nervous?

Well if you use eBay to sell things for more than you paid for them, or to buy things which you plan to sell on, then you should sit up and take note. Just because you are doing it on a small scale, or you pay tax at another job, does not mean HMRC will leave you alone. They may well class your activities as ‘trading’ and want you to declare to them your income and expenses relating to it. (Car boot sales – regular sellers at them could face the same questions.)

The Electricians Tax Safe Plan is more clear-cut. This is simply their version of the Tax Safe Plan recently offered to plumbers. From February 2012 electricians who have something wrong with their tax affairs can register for the scheme making it easier to come clean. They might have under-declared their income (the most common offence) or they could have claimed more expenses than they were entitled to claim. The offence might even be unrelated to their electrician activities – for example letting out a house.

For the purpose of this initiative HMRC is considering an electrician as anyone who installs, maintains and tests electrical systems, equipment and appliances under stringent safety regulations

Links to the HMRC pages about the above campaigns, and further advice, can be found in my blog here.

Adrian Huston, a former tax inspector, is a director of Belfast tax and accountancy firm Huston & Co –

or 028 9080 6080.

This article first appeared in the Belfast Telegraph on 29 November 2011