Thames Valley: eBay traders warned on tax

Keen users of auction site, eBay, need to make sure their internet hobby does not turn into a serious business …otherwise HM Revenue & Customs could come knocking on their door.

HMRC has issued new guidance on internet trading because it is becoming concerned that too many people are making a living out of trading on auction sites such as eBay.

If buyers and sellers are using the site in such a way then HMRC says it is income which needs to be declared and paid tax on.

Chris Lee, business tax partner at Thames Valley accountants and business advisers, James Cowper, said the new guidance needed to be taken seriously by people who were systematically using eBay to earn regular income.

“We are not talking about people who are using the site to get rid of unwanted Christmas presents or clearing out their loft,” he says. “There are people who regularly use eBay to buy and sell goods - which perhaps they have renovated or repaired - and who are using eBay as a shop window for their business.

“It is these people HMRC will be after and the guidance aims to clear up any grey areas. It also applies equally to people who use car boot sales or classified ads as a means to making a living.”

Chris Lee said that anyone using informal internet auction sites for conducting their business would be far better declaring their income – before HM Revenue & Customs come knocking on their door.

“I am sure there will be quite a few tax inspectors using eBay,” he said. “And with the recent revelation that they are paid bonuses for collecting extra tax, not all of them will be looking for bargains.”