Tax amnesty for eBay traders and electricians

by Rosalind Kent on 29 April 2012  |  22 comments
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HMRC gives ebay traders a chance to hand themselves in. And electricians too!

Contrary to popular belief the people at HMRC are actually very kind.

Yes, they chase you down when you don’t pay your taxes, and yes, they can make you pay massive penalty fines – or even bang you in prison if you're a serial offender! But they also regularly give you a chance to hand yourself in when your dealings have not been quite … above board!

And the time has come, once again, for HM Revenue & Customs to offer an amnesty to some of those who have been less than forthcoming about the money they make.

Why an amnesty?

There are various trades for which the phrase ‘cash in hand’ is more familiar than others, and HMRC wants to crack down on the billions of pounds of unpaid tax that these markets generate.

With the government suffering a few ‘funding issues’ of its own in recent years, it has been even more important for HMRC to claw back these vast sums of unpaid tax. Letting people come forward voluntarily is a good way of drawing attention to these campaigns, and allows people to get their tax affairs in order without the fear of such huge reprisals.

Are you an Electrician?

On a regular basis HMRC will scrutinise the activities of various employment sectors and in the past has launched similar campaigns where it puts the trading activities of other self-employed people (like builders, plumbers, instructors and hairdressers) under the microscope.

There is currently an amnesty aimed at those trading as electricians: the Electricians’ Tax Safe Plan. Self-employed electricians who have not declared their income are being invited to make a voluntary disclose to HMRC by 15th May 2012. The amnesty offers electricians the opportunity of making a fresh start with their tax affairs.

Coming forward about any previously undisclosed income will mean that you will only have to pay for a maximum of six tax years, you can tell HMRC how much of a penalty you believe you should pay, and you can pay anything you owe in manageable instalments. It will also mean that you are only likely to have to repay the tax you owe plus a penalty of 10% of the unpaid bill, rather than a possible 100% penalty if you are caught!

The E-Market Amnesty

Running concurrently to the electricians’ amnesty is one aimed at e-market traders. Months ago it was reported that HMRC was set to scrutinise websites like eBay where goods are bought and sold online. HMRC wouldn’t confirm or deny this rumour, but whether it was true or not, it has now set up a disclosure facility for online traders to come forward if they have not previously been declaring their earnings.

Under this new initiative, e-traders have until 14th June to voluntarily come forward and register their desire to take advantage of this E-Markets Disclosure Facility. If you come forward you will then have until 14th September to provide details of your affairs and pay what you owe.

HMRC has stated that those who come forward may have to pay no penalty at all, with most only paying 10% of the tax owed by way of a penalty. Again, as with the amnesty aimed at electricians, if you do not come forward voluntarily, you might have to pay a 100% penalty.

With these kinds of ‘discounts’ in both penalties and repayments, it seems like a worthwhile thing to do. It will also stop you worrying that the tax man is hovering over your shoulder waiting to strike with much harsher punishments up his sleeve! 

Are you an e-market trader?

Many people make genuine mistakes with their tax affairs, sometimes through lack of attention to the rules, and sometimes because of a real lack of understanding about how the system works.

E-market places such as eBay are a good example of how a genuine lack of understanding of the situation can lead to people coming unstuck when it comes to tax. Millions of goods are bought and sold each day, with massive turnovers and profits being generated for the owners of the famous site. If you're trading on eBay you should be declaring your income, but many sellers are confused as to whether they are classed as traders or not.

Put simply, if you occasionally sell a few personal possessions to raise some cash you are not a trader and you won’t need to pay any tax on your income. However, if you are regularly selling goods or services online for profit then you're almost certainly trading.

If you're still unsure, ask yourself a few basic questions: such as how and why did you get the things you're selling? If you bought them with the intention of selling them on and making a profit, then you are trading. But if they are personal possessions that you just don’t want or need any more, then you're not trading. If you're still not sure, check the HMRC manual or speak to an accountant if you're really worried.

How to come forward

It's simple to take advantage of the E-Market Disclosure Facility or the Electricians’ Tax Safe Plan. Simply contact HMRC online, by phone or by post.

Further details of the e-market initiative can be found on the HMRC website. If you have fully embraced the digital age and are an avid Twitter user, you can follow HMRC @HMRCgovuk for updates on all their schemes and amnesties, and they frequently hold live Twitter Q&A sessions that allow you to get all the details straight from the horse’s mouth. 

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