Monday 9 January 2017

Thousands Of AirBnB And eBay Users Hit By Tax Raid


Hundreds of thousands of families who earn extra cash online face shock tax bills and fines unless they declare the income by the end of the month.

Experts fear homeowners who rent out rooms on sites such as AirBnB, or ‘mumpreneurs’ who make extra cash by selling homemade goods, have no idea they must pay tax on their earnings.

In fact, most people taking part in the so-called ‘sharing economy’ are liable for tax on any cash they generate, in the same way they pay income tax on their wages.

Now, HMRC has said it is actively pursuing those who fail to declare these earnings by the January 31 deadline – and hopes its crackdown will raise millions of pounds in extra revenue.

It is using a powerful new computer system to compile information about taxpayers from ‘marketplace’ websites, such as Etsy and eBay, so it can better identify non-payers. And it is soon likely to be handed even greater powers to snoop on people’s online earnings by obtaining records from third-party payment processing firms.

Any internet sellers who are found to have owed tax and failed to submit a self-assessment return by the end of this month face a £100 fine.

It is understood the taxman will only come after people it thinks are operating like a business. Someone selling old furniture or children’s toys on eBay, for example, will not be asked to pay tax on the cash you get. But anyone who sells items regularly – or sells a number in a short space of time – and start to make a profit, may be classed as a small business by HMRC.

The crackdown comes at a time when HMRC has been criticised for focusing its efforts on ordinary families and small businesses, while letting wealthy tax avoiders or corporations off the hook. Last month it emerged that a taskforce set up by HMRC to ensure thousands of super-rich individuals pay their fair share had prosecuted just one tax cheat in seven years.

Justin Modray, director of advice firm Candid Financial, said: ‘It’s unfair that HMRC is happy to thrash out sweetheart deals with big business but someone who sells a few cupcakes on the side could be left with a tax bill and fines – just because they are the low-hanging fruit.

‘The taxman needs to take a common-sense approach and understand that many people who have recently signed up to these websites might have not realised that they need to pay tax or may have been confused by the rules.’

An estimated 5 million workers in Britain participate in the sharing economy, by selling products such as birthday cards, knitting or jam online, or by offering services – and the number is rising.

<>It follows a boom in websites such as AirBnB, Etsy and eBay over the past 18 months. These online mparketplaces allow sellers to advertise their goods, services – or even their home – directly to customers, provided a cut is paid to the websites.

From April, new rules will allow online marketplace sellers to earn £1,000 before having to declare anything to the taxman, but it doesn’t apply until then.

Emily Coltman, of accountancy website FreeAgent, said: ‘Undoubtedly many people earning money like this will have no idea that they owe tax. The UK tax rules are four times as long as the complete works of Shakespeare and no lay person is going to understand the ifs and buts of them.’

Richard Morley, of accountancy firm BDO, said: ‘Internet sellers who fail to pay tax will be unlikely to get away with it because the taxman can use its powers to conduct spot checks on groups of earners using websites and demand they hand over their details.’

An AirBnB spokesman said: ‘AirBnB hosts want to pay their fair share of tax and we want to help. We remind hosts to check and follow tax rules.’

Last night, an HMRC spokesman said: ‘The majority of traders in the sharing economy are already declaring and paying their tax just like other taxpayers.

‘The wealthiest 1 per cent pay more than quarter of all income tax with HMRC ensuring everyone pays their fair share. When we have evidence of tax going unpaid we take steps to put that right and that applies right across the economy.’



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