Leading audit, tax and business consultancy firm Blick Rothenberg has warned that eBay sellers and other online merchants could face significant tax demands if they do not register for self-assessment by the end of the year.
Under the new reporting rules, platforms such as eBay must provide HMRC with data on sellers using their services in 2024 – reports due by January 31, 2025.
Fiona Fernie, partner at Blick Rothenberg, said: “As winter approaches, we are more than halfway through the first year of reporting requirements for online sales platforms. HMRC will compare reported seller income with self-assessment data, so anyone who fails to declare income could face significant penalties of between 20% and 70% of the tax owed – plus interest.”
The deadline for registering for self-assessment of trading income in the 2023/24 tax year was officially October 5, 2024. However, Fernie says sellers who missed that date should still come forward: “It is unlikely that there will be any adverse consequences if they do not register by January 31 file their tax returns in 2025.” Failure to notify HMRC of a tax liability makes it “extremely easy” for HMRC to identify discrepancies, especially given the new reporting regime.
Small-scale sellers who receive gross trading income of less than £1,000 in a tax year benefit from a trading allowance, although they must still declare their income on their tax returns. Those earning more than £1,000 should seek professional advice to determine whether they are trading or liable for capital gains.