Declaring E-Bay Trading Income
22 September 2014
An eBay trader has been sentenced to two years in jail after failing to pay tax on over 500,000 items he sold on the auction website.
The recent Daily Telegraph article highlights the need for other eBay traders to declare their earnings or risk falling foul of the law. The number of Britons selling goods on the auction website has exploded in recent years. Many see it as a way of supplementing income while others have set up full-time.
John Woolfenden failed to pay almost £300,000 worth of tax to HM Revenue and Customs from trades he made on eBay over a period of six years. His online DVD, music and games business traded over 500,000 items of stock with a turnover valued at £1.4m.
It is the responsibility of private traders to disclose their earnings and pay correct amounts of tax. There can be a fine line between the occasional sale of personal items and trading for a financial gain. The tipping point can usually be determined by how often you sell items and how they were acquired.
HMRC launched its e-Marketplaces campaign in early 2012 to encourage online traders to bring their tax affairs up to date on the best possible terms. This disclosure facility closed in September 2012 and raised more than £7.8m in tax. It now looks as if HMRC is getting tough on online traders and the outcome of this case very clearly highlights the dangers of failing to declare the correct income.
If you would like advice on income earned through e-marketplace trading please give us a call.