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EBay Traders and HMRC
Topic Started: Dec 10 2015, 01:47 PM (850 Views)
Zissou
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BigErnst
Dec 10 2015, 02:59 PM
Glad to hear eBay are taking measures and HMRC are now on the case - this will definately see a reduction in the number of online traders not registered for VAT or Corporation Tax seeing this as a quick way of earning some income.
HMRC have been hot on e-commerce sellers since earlier this year. Not sure why you mention Corporation Tax as that would imply they've incorporated, which is anything but on the sly, and you'd have to be turning over a LOT of football cards to exceed the VAT threshold.
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Zissou
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82,000 cards (at 1 each for example) in 12 months is certainly a lot for someone who is doing this part time.

You two appear to be doing this full time, so much so you've created your own site (in Phil's case at least). I'm doing it to simply recover what I spent to complete the collection, any "profit" I make purely on the cards no doubt would be wiped out once I allocate a small percentage of my internet bill, notional expenses such as use of own residence etc.

Whilst it's a new thing for HMRC, it would almost pay for them to NOT write out to sellers and instead chase them 3/4 years down the line where they're less likely to have purchase receipts. HMRC would make a decent amount on penalties, interest on top in addition to having the person pay over more tax/NIC than if they'd been advised to keep proper records.

Safariman, would you mind advising roughly how much you've put through your Ebay account that has triggered HMRC to write to you? Would be interesting to know what HMRC considers enough (turnover wise) to focus on sellers.
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Zissou
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Phild
Dec 11 2015, 10:04 PM
I think there is a difference though between people like yourself who buy them, complete the set and then sell the rest to make your money back and the ones who constantly restock and purely sell to make an extra few quid every week.
Oh certainly, but it'd be interesting to see what figure HMRC need to see before chasing the person.

We have a client who was selling some perfume as a hobby, over a few years (unbeknown to us) and HMRC hit them hard a few months ago, so it's not just card collectors they're aiming for, before any of you feel victimised! :P

I feel for the proper sellers, as you'll likely have to mark up to account for the tax you have to pay and if you're doing very well, VAT. If you're making enough profit to justify going Limited, then kudos to you!
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Zissou
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ofb1988
Dec 11 2015, 10:25 PM
What is the actual limits before tax kicks in? I think I've made 3k one year then really under 1.5 the last 6 years. I only really sell off the odd card here and there and Xbox games I don't play. Tbh I thought as its like my personal things it was OK. I do have thousands of base cards that I was gonna list in smaller lots but a bit wary now lol.
Typically you'll have your tax allowance of 10,600 for the tax year, so you'll have to take into account any other income you have to determine whether any tax would be payable. If there's excess, it'll be taxable at 20%.

As you'll be seen as a sole trader, you'll also have Class 4 NIC to pay, however with the figures you've given you'll be well within the NIC allowance.

Some people will try argue it's simply a hobby, but the sheer level of transactions and the fact you're doing it with a view to make profit, will help HMRC argue that it is a trade.
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Zissou
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Phild
Dec 11 2015, 10:29 PM
My tax bill for the past year was more than enough to keep them happy :crying <br /><br />I think if you're doing it right as a legit trader then you have nothing to fear, they're welcome to see my books anytime. I have receipts for everything and as i'm strictly online then theres no cash payments going in and out either.
If it's all going through a Limited Company, try take peace in mind that you're paying as little as possible to HMRC (if structured correctly, of course) :D
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Zissou
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Phild
Dec 11 2015, 10:30 PM
ofb1988
Dec 11 2015, 10:25 PM
What is the actual limits before tax kicks in? I think I've made 3k one year then really under 1.5 the last 6 years. I only really sell off the odd card here and there and Xbox games I don't play. Tbh I thought as its like my personal things it was OK. I do have thousands of base cards that I was gonna list in smaller lots but a bit wary now lol.
If you're selling spares or selling your own collection off then I doubt you have anything to worry about. Its more if you are buying to sell for profit on a regular basis.
Given the level of profit he's turning over, I wouldn't be surprised if HMRC would still look at this as trade. If he's in full time employment as well as selling this much, he could be looking at tax of 600 for the 3k year and 300 for each of the 1.5k years, and HMRC would look to recover all of it (plus penalties and interest, if they're being really arsey).
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