HMRC are requesting increased powers to tackle online tax evasion.
HMRC consider that there is a “hidden economy” of businesses and individuals who operate online and do not pay the requisite amount of tax on the money they make. They estimate its worth at an annual £5.9 million pounds in missed tax payments. They have submitted a consultation document setting out the details and the 12 week process concludes on 14th October. HMRC’s aim is stated as one of fairness to all.
“Effective tackling of the hidden economy will ensure a level playing field between those businesses and individuals who comply with their tax obligations and those that do not.”
According to the consultation paper, HMRC want to increase the amount of data that they are currently able to collect from individuals and companies who sell online. They have not named particular companies, but any online market place must be considered as potentially involved in the proposed data trawl; including well-known leaders like eBay, Airbnb and Gumtree.
HMRC are your data
The document does state that companies who offer electronic payment services and who are intermediaries will be affected. It also explains why such information is so useful to HMRC’s tax evasion teams;
“Data can be particularly powerful when it is collected from third parties who facilitate trade, either between businesses or between businesses and consumers. This is because they can provide information in bulk about the activity of large numbers of traders, and because third party data can be used as an independent check against the data the taxpayers themselves report to HMRC. “
An understandable position, as we all become more aware of the value of our personal data and how it can be used, by people other than ourselves, to make money. At this point HMRC are emphasising that their focus is on sellers who are not declaring their earnings and profit, not on tracking taxpayers’ purchases. Although they will have the latter information by default both now and into the future, if the proposed changes are sanctioned by government.
