On the one hand, someone with a day job and a sideline on eBay, who did not think he had any trading income. On the other hand, a bill for over £28,000 from HMRC. This was the dispute that recently came before the Tax Tribunal.
The taxpayer in question worked as a security officer. He hadnʼt told HMRC he was trading and claimed that he was being harassed by the tax authority. His case rested on the argument that his eBay and PayPal accounts had been repeatedly hacked, and that many of the PayPal transactions under investigation were personal transactions, not trading transactions. HMRC looked at his various eBay names and his presence on another trading platform noted what he offered for sale, and totted up 793 feedback entries in one twelve-month period alone. It investigated his bank account, which showed payments from Amazon and PayPal, and payments to delivery companies, like Parcel Monkey: and it drew its own conclusions.
The Tribunal did not accept the taxpayerʼs version of events. The explanations . . . are not credible given the volume of transactions, the period over which they are recorded and the transfers involving his Barclays account. ʼ In fact, it considered that HMRCʼs treatment was bordering on generous. HMRCʼs reading of the case won the day: online sales were held to amount to trading.
The case shows HMRCʼs capability when it comes to trawling data in pursuit of transactions it thinks are taxable. With new rules set to apply from 1 January 2024, giving the tax authority greater access to information on the income of those using digital platforms to sell goods and services, HMRC looks set to turn to digital detectives more often.
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