As you may be aware, the Inland Revenue takes a keen interest in monitoring activity on eBay. The Revenue has even now asked eBay to provide it with a list of its users!! Can you imagine their reluctance!

Many people who sell items on eBay may not have even considered that this activity has tax consequences, even if the ‘business’ activity started as ahobby!!

Fortunately, not all transactions on auction sites are taxable. The sale of unwanted household items for example will not be taxable. However, if items are bought, kept for a short time and then resold later for a profit, this may constitute a trade and lead to a tax liability. The Inland Revenue will particularly consider this to be the case if such transactions occur frequently.

In addition, if you have not notified the Inland Revenue that you are “trading”, you may be liable to a penalty. You should also bear in mind that undisclosed internet trading income could result in overpayments to you of taxcredits or benefit claims, as you will have under-declared your income.

Brought to you by Smith Emmerson, Nottingham accountants