According to accounting and advisory firm, UHY Hacker Young, eBay traders operating on a casual basis over the Christmas period must still register with HM Revenue and Customs, regardless of whether there is any tax to pay, or risk a fine of GBP100.
Following enquiries from the firm, the UK tax authority confirmed that any income earned from trading online, no matter how small the amount, will result in the need to notify the commencement of a self-employment, even if the trader is under the income tax threshold.
According to UHY, thousands of casual traders will be buying and selling online in the period leading up to Christmas without realising their obligations towards the taxman. Trading includes buying goods with the intention of selling them at a profit, as opposed to selling personal possessions.
HMRC is entitled to issue a GBP100 fine for failing to register. If the individual is already a tax-payer or the profit from trading exceeds the personal allowance then a liability may arise to income tax, and national insurance.
Derek Levy, partner at the firm's London office, observed that:
“It is unlikely to occur to the casual trader who dabbles a bit at Christmas to register with HMRC. Whether the trader is under the taxable threshold is irrelevant – and this is where people will get caught out.”
He added:
“You are allowed to sell personal possessions online without notifying HMRC, but if goods are purchased with the intention of selling them at a profit, you are trading, and you must register and possibly file a tax return.”
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