Tax experts are warning that sellers could face fines or criminal investigation if they don’t follow HMRC rules as more people in the UK use sites like Vinted, eBay, and Etsy to sell things they don’t want in the new year.
HMRC has been getting detailed information about online sellers who do more than 30 transactions a year or go over certain reporting limits since the beginning of this year. For example, Vinted sellers who make more than £1,700 in gross sales over a 12-month period. With a £40 million investment in enforcement resources, HMRC can now see more of what’s going on with online sales. If sellers don’t follow the rules, they could face big fines that are bigger than their profits.
Lee Murphy, Managing Director of The Accountancy Partnership, a leading accountancy firm that specialises in tax returns for Amazon and eBay, discusses how HMRC could detect and act on your side hustle.
“HMRC uses the platform, whether this is Etsy, Vinted or even eBay, to match against each individual’s tax return.
Those who’ve exceeded an annual trading allowance of £1,000 and also fail to declare this may receive reminder letters to ensure that they get their tax return done.
While you may think this is just a scare tactic, ignoring these types of letters may lead to further full tax inquiries and criminal investigations.”
Murphy discusses whether you’re at risk of being caught out, and any next steps you need to take if you’ve got a side-hustle:
“If you are selling unwanted personal items and not making repeat trades or dropshipping, then you’re unlikely to face HMRC scrutiny.
If you do, however, earn over £1,000 from your side hustle each year, or you exceed 30 sales within one year, then you must let HMRC know about this to avoid getting any fines or being under any sort of criminal investigation.
If you’re unsure of how many items you’ve sold or how much money you’ve made so far, then it’s best to go back and find your detailed sale records. Also keep track of any expenses that’ve gone with the sales; stamps, postage materials and courier payments, as you could get some of this back when the time comes to doing your self-assessment tax form.”