Selling on eBay? Expect the taxman to come knocking

The Taxman has announced a number of schemes to crackdown on people who are avoiding paying tax, and one of them could cause serious trouble for anyone selling on eBay.

It has apparently developed sophisticated software that can track down people who are selling on any online auction site and not paying the right tax on it.

Taxman tracking you down
The sites targeted by HMRC include eBay, Auto Trader, E-auctions, Amazon, Craigslist and Gumtree. It will be able to identify anyone who sells regularly on one or more of these sites. It will then compare this to the electronic records it has of people who pay their taxes. If you're selling but not declaring the income, the process will flag you up as a tax evader, and you can expect the taxman to come calling.

The good news is that if you very occasionally sell personal items there's no need to pay tax on this. However, if you're making a living from regular sales, you should be paying income tax, VAT and national insurance, and the taxman will hunt you down and demand you pay up.

The trouble is, of course, that many people are operating on the borders, selling their own belongings, and then selling for friends, or picking things up in charity shops and jumble sales and selling them on. They haven't made a firm decision to earn a living this way, which means they never sat down and made a decision to sort out things like tax, but gradually they are making more money from their sales and they may well fall foul of the latest crackdown.

And if you are caught, you can expect harsh treatment. HMRC is currently undertaking 16 criminal investigations as a result of earlier crackdowns on various kinds of business and professionals.

It means it's more important than ever to make sure you are on top of what tax you ought to be paying, and are completely honest in your dealings with the taxman. It may feel painful to hand over such a massive chunk of money you have worked hard to earn, but it's much less painful than the fines and investigations you'll face if you try to beat the system and then are caught.

But what do you think? Is the eBay crackdown fair? Let us know in the comments.
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