In times of economic difficulty many people turn to alternative forms of money-making to try and earn a few pennies to help them pay their bills.
However, the vast majority do not tell the taxman about their extra income and HMRC is set to launch a crackdown on those who it says are evading paying taxes.
The popular auction site Ebay is one of the prime targets the taxman has said it will be investigating, along with other common sites such as Gumtree, Craigslist, Amazon, E-auctions and Autotrader. The taxman has said they will be able to identify those selling regularly on one or more of the sites and will compare the data to the records they hold regarding payment of taxes and declared income. Any person receiving a regular income but failing to tell the taxman can expect to be caught and penalised.
And the punishments the taxman has been dishing out are far from lenient. HMRC is currently pursuing 16 sets of criminal investigations against those they have already discovered earning a bit of cash on the side in this way.
However, the good news for those who only offload the odd thing here and there is that the taxman won’t pursue those who only sell infrequently and personal items only. The people the HMRC is targeting are those that make a substantial income from the sites, making them liable to tax, national insurance and VAT.
The schemes to catch people who are failing to tell the Inland Revenue about their activities is bound to prove tricky as many people list items for friends and family, or on behalf of charitable organisations. There are also many people on the fringes of profitability, who haven’t actively decided to earn an income from Ebay and the like, but are just starting to make some money. Unfortunately these individuals are likely to fall under the taxman’s beady glare.
For debt advice, speak to Blair Endersby.