HMRC launches fresh crackdown on online marketplace sellers
HMRC launches fresh crackdown on online marketplace sellers
HMRC has launched a fresh crackdown on those who fail to declare money earned from online marketplace sales.
The tax authority has started sending out ‘nudge’ letters to people they suspect have been operating in the hidden economy and not reporting income to HMRC. The recipients have been selected based on data HMRC has received from online marketplaces about sellers using their platforms.
The ‘one to many’ letter states that “We have information that shows you’ve earned income from online marketplace sales up to the tax year ending 5 April 2023. You need to tell us about this income. This is because you may owe tax.”
Recipients are being given 30 days from the date of the letter to either declare their income or to contact HMRC.
Dawn Register, a tax dispute resolution partner at BDO said:
“People who receive this letter may be tempted to file it away but they absolutely should not ignore it.
“There are a number of ways in which people can make a voluntary disclosure to HMRC about underpaid tax. Selecting the most appropriate route will depend on a person’s individual circumstances and the reasons why the inaccuracies occurred.
“Unpaid tax may be subject to late payment interest - currently at 7% and set to rise by a further 1.5 percentage points in April - plus penalties depending on the nature of the reasons for non-compliance, so it often pays to come clean at an early stage.
“In some cases, those with historical tax liabilities may be able to agree a Time to Pay arrangement to repay money owed in instalments.
“This campaign should serve as a warning to those who are earning income from online platforms and marketplaces that they will need to ensure they comply with their tax obligations. HMRC now has automatic access to much more data on digital platform users and their transactions, leaving few places to hide for people intent on hiding their earnings.”
New rules which oblige digital platforms to report data to HMRC about the incomes earned by their users came into force from January 2024, with the first reports delivered to HMRC by 31 January 2025.
Last year, HMRC launched a new tool to help people who sell goods and services online to understand whether and how they need to tell HMRC about their income. The tool is designed to help those who sell goods and services, sell personal possessions, rent out land or property, create online content or receive income through other sources such as income from savings and investments or selling property.
ENDS
Note to editors
About BDO
BDO LLP operates in 18 offices across the UK, employing 8,000 people. It has UK revenues of £1bn.
It provides Audit, Tax, Deals, and Consulting, Risk & Outsourcing services predominantly to mid-sized, entrepreneurially-spirited, high-growth businesses that are driving growth in the UK economy. BDO calls this segment of the market the UK’s economic engine.
BDO LLP is the UK member firm of the BDO international network.
BDO’s global network
The BDO global network provides business advisory services in 166 countries and territories, with more than 119,000 people working out of 1,800 offices worldwide. It has revenues of US$15bn.
Contacts
Frank Shepherd
frank.x.shepherd@bdo.co.uk
07812 463601
The tax authority has started sending out ‘nudge’ letters to people they suspect have been operating in the hidden economy and not reporting income to HMRC. The recipients have been selected based on data HMRC has received from online marketplaces about sellers using their platforms.
The ‘one to many’ letter states that “We have information that shows you’ve earned income from online marketplace sales up to the tax year ending 5 April 2023. You need to tell us about this income. This is because you may owe tax.”
Recipients are being given 30 days from the date of the letter to either declare their income or to contact HMRC.
Dawn Register, a tax dispute resolution partner at BDO said:
“People who receive this letter may be tempted to file it away but they absolutely should not ignore it.
“There are a number of ways in which people can make a voluntary disclosure to HMRC about underpaid tax. Selecting the most appropriate route will depend on a person’s individual circumstances and the reasons why the inaccuracies occurred.
“Unpaid tax may be subject to late payment interest - currently at 7% and set to rise by a further 1.5 percentage points in April - plus penalties depending on the nature of the reasons for non-compliance, so it often pays to come clean at an early stage.
“In some cases, those with historical tax liabilities may be able to agree a Time to Pay arrangement to repay money owed in instalments.
“This campaign should serve as a warning to those who are earning income from online platforms and marketplaces that they will need to ensure they comply with their tax obligations. HMRC now has automatic access to much more data on digital platform users and their transactions, leaving few places to hide for people intent on hiding their earnings.”
New rules which oblige digital platforms to report data to HMRC about the incomes earned by their users came into force from January 2024, with the first reports delivered to HMRC by 31 January 2025.
Last year, HMRC launched a new tool to help people who sell goods and services online to understand whether and how they need to tell HMRC about their income. The tool is designed to help those who sell goods and services, sell personal possessions, rent out land or property, create online content or receive income through other sources such as income from savings and investments or selling property.
ENDS
Note to editors
About BDO
BDO LLP operates in 18 offices across the UK, employing 8,000 people. It has UK revenues of £1bn.
It provides Audit, Tax, Deals, and Consulting, Risk & Outsourcing services predominantly to mid-sized, entrepreneurially-spirited, high-growth businesses that are driving growth in the UK economy. BDO calls this segment of the market the UK’s economic engine.
BDO LLP is the UK member firm of the BDO international network.
BDO’s global network
The BDO global network provides business advisory services in 166 countries and territories, with more than 119,000 people working out of 1,800 offices worldwide. It has revenues of US$15bn.
Contacts
Frank Shepherd
frank.x.shepherd@bdo.co.uk
07812 463601