HMRC turns its tax spotlight on online traders

HM Revenue and Customs has started its latest targeted tax clampdown campaign against online marketplace traders.

Like previous campaigns, there is a time-limited opportunity where online marketplace traders can pay the tax they owe and benefit from lower penalties available to those who come forward, rather than wait for HMRC to catch up with them.

Marian Wilson, head of HMRC Campaigns, said: "This campaign is part of a wider HMRC initiative to provide support and guidance to the public on tax evasion and is aimed at people using online marketplaces to buy and sell goods as a trade or business and who fail to pay the tax owed.

"Those who only sell a few items and who are not traders are unlikely to be liable to pay tax on what they sell and will not be targeted by this campaign.

"Our aim is to make it easy for online traders to contact us and make a full disclosure of income, thereby putting their affairs in order."

Under the e-Markets Disclosure Facility, online marketplace traders can come forward between March 14 and June 14 to tell HMRC they want to take part.

They then have until September 14 to give details of the tax owed and arrange for full payment, including any interest and penalty due. If they make a full disclosure of what they owe before September 14, some will receive no penalty at all, with most receiving a penalty of no more than 10 per cent of the tax owed.

After that date, using information pulled together from many different data sources, HMRC will investigate those who have failed to respond. The Department has recruited additional investigators and says that it will pursue those who have failed to declare their earnings and pay up. Penalties of up to 100 per cent of the tax owed or a criminal investigation could follow.

More than £500m has been raised by HMRC from voluntary disclosures, and a further £105m from follow-up activity. Previous campaigns have targeted offshore investments, tutors, central heating engineers, medical professionals, plumbers and VAT defaulters.