eBay sellers could be facing huge tax bills from HMRC if they don’t register for self-assessment by the end of the year, say leading audit, tax and business advisory firm, Blick Rothenberg.
Fiona Fernie, a Partner at the firm, said: “Now that winter is upon us, we are well over half-way through the first year of the online sales platform reporting regulations, meaning platforms such as eBay, are now required to report details of sellers who have used their services in 2024 to HMRC. The first deadline for filing these reports is 31 January 2025.”
She added: “HMRC will compare the reports they receive with their self- assessment records to determine if online sellers have paid the correct amount of tax on the income or gains received. A failure to register can result in penalties of between 20% and 70% of the tax due where HMRC judge the behaviour to have been ‘deliberate but not concealed’ plus significant interest charges where tax is paid late.”
Fiona said: “In the UK, the deadline for registering for self-assessment was 5 October 2024 for any trading income received in the 2023/24 tax year. Given the first 3 months of 2024 fall into both the new reporting regime and the 2023/24 tax year, those who have been trading online and have not declared their income have a high risk of being discovered by HMRC. However, while the deadline for registering for self-assessment has technically already passed, those affected should still contact HMRC as soon as possible to register sine it is unlikely that there will be any adverse repercussions as long as they file their tax returns by the 31 January 2025 deadline.”
She added: “In cases where no return has been filed it will be extremely easy for HMRC to prove that a taxpayer has failed to notify their liability to income tax. Where taxpayers have been sent a tax return but not included some or all of their trading income from online platforms, it will not be a complicated exercise for HMRC to check for discrepancies and penalise where there have been errors in returns.”
Fiona said: “Fortunately, for the small-scale seller of goods, there is an exemption from tax where gross trading receipts in a tax year do not exceed £1,000, although they still must report their trading income on their tax return. Individuals with income above the £1,000 threshold would be wise to seek advice as to whether their online activities actually constitute operating a trade, or if it would be more appropriate to treat the activity as giving rise to a capital gain.”
