Online sellers could face further crack downs from HMRC

Members of Parliament (MPs) have called upon internet selling platforms such as eBay and Amazon to work harder to ensure that regular users are declaring their online income to HM Revenue & Customs (HMRC).

The calls come after HMRC previously reported that it had begun collecting data on users of online selling sites back in January, as part of a year-long campaign to crack down on tax avoidance.

Since the Revenue’s campaign begun, online marketplaces can now be asked to provide sellers’ data to HMRC on an impromptu basis.

In recent days, MPs have called upon the websites to do more to prevent tax avoidance on sales made online. The concerns raised have a particular focus on VAT, after the Public Accounts Committee (PAC) announced that it was looking into VAT-liable online sales on products which may have originated from outside of the EU.

Meg Hillier, chair of the PAC, has raised concerns that “Overseas sellers that avoid VAT undercut the prices charged by small, law-abiding British businesses, hitting British jobs.

“This is a double whammy for taxpayers,” she said.

The concerns raised come shortly after recent research found that small online traders who fail to pay tax on internet earnings are, in some instances, facing tougher HMRC penalties than larger firms, under the tax authority’s ‘deliberate defaulters’ programme.

Businesses and individuals that sell goods online are being hit with penalties of around 59 per cent of tax due (on top of re-paying the tax owed), while larger firms are seldom fined more than 50 per cent under the programme, reports suggest.