As HM Revenue & Customs continue to crack down on tax avoidance, online traders are to be tracked using web robots. HMRC data indicates that significant numbers of people are receiving income which needs to be declared to the tax man. The campaign for e-marketplace traders will include online traders being tracked by the web robots.
Traders who use sites like AutoTrader, Gumtree and eBay will be targeted by HMRC during efforts to improve tax compliance. However, HMRC are keen to point out that individuals who already submit tax returns and make declarations are not at risk of investigation. The individuals who regularly trade goods online with a high value or make regular sales and haven’t registered with HMRC will face investigation.
According to the tax director at the Institute of Chartered Accountants of Scotland, Derek Allen, information will be mapped out by the web robots that indicate trading online. The areas which are most likely to be targeted are Income Tax, VAT and Capital Gains Tax. He also advises individuals to approach HMRC rather than risk an investigation and penalties which could be up to 100 percent of tax owed.
As online trading sites like eBay have become increasingly popular, the number of online traders has increased. According to eBay, over a million people earn their main income from selling online. Allen added:
“HMRC information suggests there are significant numbers of people who obtain income which needs to be returned. However, there may be expenses and capital allowances which may be set against the income.”
Outsourcing to a low cost accountants will ensure that all applicable reliefs and allowances are claimed, legitimately reducing a tax bill.