Online traders told to come clean

ONLINE traders with undisclosed or under-declared profits must ‘own up’ by the middle of this month or face potentially swingeing penalties from the HM Revenue & Customs, tax advisers have warned.

Heather Taylor, of Grant Thornton’s tax investigations team in Birmingham, said: “We’ve already seen HMRC’s various trade specific disclosure campaigns, including those targeted at plumbers, private tutors and doctors and dentists, which HMRC announced have yielded nearly £25m so far in additional tax from voluntary disclosures.

“But most revenue officers believe that this latest campaign targeting online traders will yield the highest returns yet.”

Taxpayers who need to make disclosures must register do so by June 14 and then quantify and pay undisclosed liabilities for the past six years by September 14 if they wish to take advantage of the offer of a lower maximum 20% penalty. After that date the normal regime will apply and much higher penalties will be incurred, with a risk of prosecution for those who do not come forward.

“HMRC apparently obtained notices against the biggest e-marketplace providers in March 2012, which require them to submit to HMRC their registers of substantial traders using their sites, including names, addresses and particulars,” added Ms Taylor.

“Only details from April 6, 2008 onwards are required from the providers, but this coincides with the boom in internet trading and it is likely that some people with very substantial undeclared trading activity will be caught in the net.

“It may not be merely the ‘back bedroom’ trader who has a full time employment which has used up their tax allowances, but also established businesses which have omitted whole sections of their activities from their declared income. The fact that any profits have been spent will not be a defence.”

Ms Taylor said HMRCs commitment to clamping down on tax evasion was evidenced by the recent prosecution of a plumber who did not take advantage of the disclosure opportunity when it was available and who has received a four-year prison sentence for concealing approximately £100,000 of profits.  

“Local online traders should seek to regularise their affairs within the terms of the present opportunity while it is on offer. If they do not register HMRC will use the information it gets from the e-marketplace providers and come calling,” she concluded.