Online traders have been warned they must disclose their earnings to HMRC, following a recent prosecution of an eBay trader.
South Wales independent chartered accountants WBV Ltd is highlighting the issue following the case of a Manchester man who has been jailed for two years for evading £300,000 in tax following an HMRC investigation.
John Woolfenden sold CDs, DVDs and console games via eBay and other auction sites such as Play.com and Playtrade using the name “Globalworldentertainments”, but never declared his self-employed status or sales for tax purposes.
When Woolfenden’s house was raided by HMRC in May 2013, officers found the house has been set-up as an online trading base, with boxes piled high in spare rooms and even the shower.
Forensic accountants from HMRC found that £1.3 million had passed through various bank accounts over a six-year period. Some money had also been laundered through American bank accounts.
Said WBV director, David Rowe, “People operating online trading activities as pseudo-businesses should take this prosecution as a warning of the consequences of not declaring their income to the relevant tax authorities.
“Individuals who sell things online to make a profit, and do so often or regularly, will be considered as ‘traders’ by HMRC, and will need to register with the tax authority for self-assessment.
“HMRC is likely to start an investigation particularly if you register as a business seller on an Internet auction site and do not declare your income to them.
“By speaking to a trusted accountant online traders can get the advice they need to ensure they are tax compliant.”
Woolfenden was investigated as a result of HMRC’s e-Marketplaces campaign to tackle undeclared tax and income from online trading. While this closed in September 2012, the department says that it is continuing to use the data gathered during the campaign to identify people who should have come forward but did not do so.
For more information or help registering for self-assessment, please contact WBV Ltd.
For further information, please contact:
David Rowe
WBV Limited
Tel: 01639 635555
Email: davidrowe@wbv.ltd.uk
The Third Floor
Langdon House
Langdon Road
SA1 Swansea Waterfront
Swansea
SA1 8QY
Tel: 01792 652108
Woodfield House
Castle Walk
Neath
SA11 3LN
Tel: 01639 63555
WBV Ltd is a member of the prestigious UK200 Group of independent practicing chartered accountants with offices throughout the UK and associates overseas.