HMRC hits eBay sellers but halts late filing fines

One hundred pounds seems to be exercising the taxman – for being the sum that both puts eBay users on his radar, and the fine he hits other taxpayers with but is now waiving on appeal.

In fact, users of the auctioneer with only £100 in profits are among 14,000 people reportedly in receipt of tax demands, just as 900,000 self-assessors emerged as being let-off the late-filing penalty of £100.

Each development relates to HM Revenue & Customs’ powers, which have been toughened up in the case of eBay (and the likes of), but relaxed on penalties for people filing late but “trying to do the right thing”.   

Such was the explanation of a HMRC spokesman to the Daily Telegraph, in light of the newspaper’s claim that tax staff are no longer checking why forms are filed late, as long as a ‘reasonable excuse’ is provided.

Until now, HMRC has conducted a thorough analysis of the excuse given by those taxpayers who appealed the £100 levy, sometimes making them wait up to three weeks to see if it was acceptable.

But the Revenue is said to be facing a backlog of almost one million letters from taxpayers, seeming to explain why its officials have reportedly been moved from call centre duties to sifting through the paper mountain.

At the same time however, the department has invoked its powers to demand that eBay and other similar websites including Gumtree hand over information about their customers.

It is the sort of information that led to the arrest and prosecution of John Woolfenden, a Manchester man who turned over £1.4million on eBay but never paid HMRC a penny (until he was caught).

He is the highest profile scalp from HMRC’s e-marketplace campaign, launched after the deployment of ‘web robot’ software and guidance on when a ‘hobby’ becomes a reportable ‘trade.’

Although it dates back to 2007, it is that Revenue guidance which the 14,000 recipients of tax demands have unlikely followed, notably any one of the four criteria that indicates an eBay seller to be trading and therefore liable to tax.

Editor’s Note: Related Reading –

Tax experts optimistic about penalty review

Revenue might remove £100 automatic penalty

eBay pops up on Revenue radar

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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