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EBay Sellers Must Check Tax Position
Thousands of people across the UK regularly
sell items on eBay; it has quickly become
one of the world’s most popular ways of
buying and selling goods. Many people now
gain a good income from selling goods, but
you could be at risk of fines and tax
repayments if you are deemed to be a trader
by HM Revenue and Customs (HMRC).
 Experts
from Tax Consultancy group Chiltern have
warned that sellers with high numbers of
feedback will be targeted for investigation
by HMRC as it signifies a large number of
sales, meaning that the seller is more
likely to be classed as a trader.
The problem is that most eBay sellers do so
as a hobby or side project from their daily
jobs; and may therefore be unaware that they
could be seen as a trader and owe tax. If
you are classed as a trader you will need to
register with the tax authorities and
declare your income from eBay sales; even if
you operate your sales from your bedroom in
your spare time!
Example:
If you sell
an old coat, or one you decide you don't
want on eBay; then that is a personal sale.
If you spot
3 cheap coats and buy them to resell on
eBay; that could be considered acting as a
trader, but is in a grey area.
If you buy
10 cheap coats to resell on eBay, then the
odds are you would be classed as a trader.
With many eBay sellers preparing for the
busy Christmas period, there are likely to
be a number that will sell enough to become
classed as a trader over the holiday period.
This could mean that you will need to pay
tax, even if you are not currently expected
to do so.
If you are unsure whether your eBay sales
require you to register and pay tax, then
you should get professional advice
immediately. Acting quickly could have
serious benefits; if you discover that you
do owe tax, then disclosing this voluntarily
to HMRC will almost certainly mean lenient
treatment and reduced fines.
Read our free article on Starting and
Running an EBay Business here.
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