HMRC have information that shows you may have earned money from selling goods and/or services through an online marketplace, such as Amazon, eBay or Etsy. They have obtained information from third parties and carried out risk assessments.
The Financial Times has reported that online marketplaces such as Amazon, Airbnb, Deliveroo, eBay and Uber will be required to report the income made by sellers on their websites and apps to HMRC from January 2023, in a move affecting gig workers, freelancers and self-employed people.
Do you need to register with HMRC to sell on Amazon?
Every country has different rules and regulations regarding the taxes you must pay on income made from an eCommerce enterprise , so please consult an accountant in your country of residence. When you are ready to start your Amazon business in the UK, you need to register with HMRC .
There are many ways HMRC can find out about undeclared income. First of all, they use sophisticated software called Connect. This system is designed to analyse large amounts of data and pick up any inconsistencies that could point to tax evasion. From there, HMRC can launch an investigation.
someone alerting HMRC to unusual activity in your accounts. noticeable inconsistencies between tax returns (e.g, a big fall in income from one year to the next) frequently filing tax returns late. your accounts not matching the industry norms.
On average, tax audits can be expected every five years or so, while only a few per cent of income tax and corporation tax returns are investigated each year. But the frequency of tax audits and the likelihood of in-depth tax investigations increases if HMRC suspects that tax is being underpaid.
If anything is significantly different, for example, your costs have increased considerably or your earnings have plummeted, which lowers your Income Tax liability, it creates a red flag, which can trigger an HMRC investigation.
If you are a UK tax resident and you hold an account in another country then HMRC will receive information about you. This will include details about account balances and sums paid to accounts (for example, interest and dividends, or from the sale of investments).
HMRC can obtain account data from PayPal – the online payment company owned by eBay – from smartphone app stores run by Apple and Google, and from holiday comparison websites and a host of other online retailers.
As a seller you will have the obligation to file a corporation tax return annually to declare your profits. It is very important that you declare and pay your tax correctly as there can be serious legal action taken in case of incorrect tax declarations such as fines, penalties and/or possible jail time.
The tax rate applied to your order will be the combined state and local rates of the address where your order is delivered to or fulfilled from. For example, if you live in a state that does not impose a sales tax, you may still see tax calculated on your order if shipped to another state.
Do you need to be VAT registered to sell on Amazon? The short answer to this question is: yes, you can sell on Amazon if your business isn't VAT registered.
HMRC have information that shows you may have earned money from selling goods and/or services through an online marketplace, such as Amazon, eBay or Etsy. They have obtained information from third parties and carried out risk assessments.
An Amazon spokesperson said: “Amazon UK Services is only a small part of our business, and when you look across all our UK companies we paid corporation tax last year. The reduction in tax for Amazon UK Services specifically is a result of our significant capital investments in the UK.”
You must declare your eBay income to HMRC if, as discussed, you meet any of the following criteria: You are trading assets for profit on eBay. Your annual income from trading on eBay is greater than £1,000. You've sold personal belongings of individual worth greater than £6,000.
How to tell if HMRC is investigating you. If HMRC is investigating you formally, you will receive a letter explaining that they have started an official investigation and asking for additional information. You will not typically be notified when HMRC is looking into your tax affairs prior to this.
Transaction monitoring records information about you when you are using HMRC and shared HMRC services. We collect personal data about: the computers, phones or devices you use. the internet connections you use.
Banks do not notify HMRC of large deposits. However, HMRC can access our financial information by issuing a financial institution notice without our consent. They can see large deposits and other financial data like interest earned, crypto, dividends, pension contributions, Gift Aid payments, and more.
HMRC have 1 year from the filing deadline to make enquires in to your tax return. However, In reality, HMRC can go back and look at your Self Assessment submission using the discovery assessment rules if certain conditions are met.
HMRC does not shy away from carrying out investigations covertly to highlight tax fraud. HMRC off Members of their Enforcement and Compliance Taskforce have broad powers to expose tax evasion, including entering business premises disguised or simply posing as customers.
Before self assessment around 1 in 100 tax returns were examined; now the number will be around 1 in 10, possibly even higher as HMRC gains access to new resources. That means that every taxpayer – and that generally means every self employed person – will get inspected within a ten year period.
How far back can HMRC go in a tax investigation? The HMRC investigation time limit is 4 years if an innocent error is suspected; where mistakes in tax returns are deemed careless or negligent, the window extends to 6 years. Suspicion of deliberate tax evasion warrants an investigation period of 20 years.
Yes. HMRC carries out compliance checks on a certain number of returns each year to check their accuracy. Some checks will be completely random, whilst others will be made on reasons of suspicion.
In the majority of cases fraud and criminal activity will be suspected and warrant further investigation. HMRC will use every means at its disposal where it believes it has the right to investigate undercover in such areas as: There is a deliberate attempt to defraud and or withhold VAT payments.
