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eBay UK VAT crackdown??
 

Hey guys,

I have read about laws changing regarding VAT and eBay starting to crack down on sellers who are not VAT-registered. Basically the new laws say that UK market places will be held responsible for tax avoiding sellers. Therefore this gives an incentive for eBay to ban foreign sellers who are not registered for VAT. As we know the threshold is £83k/per year for those based in the UK, but for those abroad it's 0 so essentially they should register for VAT starting from their first sale.

I am a dropshipper with an offshore company living far away from the UK. This business is not really viable if have to pay VAT, as it's a high revenue low profit margin business + not all of my suppliers are VAT-registered.

Does anyone have experience of this? So far I've heard one seller getting a warning from eBay to register for VAT or have is account shut down in 30 days.

Now of course the real solution for this is to operate 10-15 UK-registered stealth accounts each making under £83k in revenue per year, so in total you can still process over £1m per year without paying VAT ;).

Re: eBay UK VAT crackdown??
 

Don't think you're going to get any help here from UK people who pay VAT & taxes.

If your business isn't viable with VAT the business isn't viable and you should go get a day job and PAYE.

Re: eBay UK VAT crackdown??
 

How about you sell in your own country and stop making your money from ours whilst avoiding paying your dues.

Re: eBay UK VAT crackdown??
 

I concur, wrong place to ask for help. How about you pay taxes if you are leaching out of our economy?

No one here supports tax fraud.

Re: eBay UK VAT crackdown??
 

So everyone is paying taxes from their stealth accounts ? Give me a break. Don't be keyboard patriots.

Re: eBay UK VAT crackdown??
 

First of all I asked for experiences about VAT and eBay, not for methods how to evade taxes. I am simply curious whether eBay has forced anyone to register for VAT? This is so I can take the appropriate measures in the future, possibly register for VAT or start using suppliers outside the UK.

I'm quite suprised that people here would be so much for paying all taxes but happy to fraud eBay and PayPal with ⊗⊗⊗⊗ documents etc. But don't get me wrong, I also understand how you feel if you are based in the UK and paying all taxes, but competing against foreign sellers who don't.

From my personal views, I pay taxes to the country where I live. When I used to live in the UK I paid all my taxes as I should. But now not living there, doesn't make sense to pay taxes somewhere where I don't get anything in return.. Anyways a bit off topic.

Re: eBay UK VAT crackdown??
 

Erm, you are making money off our economy, so you pay your taxes for doing so, call it a 'fee' or a 'duty'. Without us, you would be skint and poor. Think about it.

Re: eBay UK VAT crackdown??
 

wired is right here.

Re: eBay UK VAT crackdown??
 

WIRED is always right.:uk:

Re: eBay UK VAT crackdown??
 

First and foremost, the right thing to do is pay taxes.

But then this raises the question of stealth accounts.

No body is paying their taxes using their stealth accounts-- not one-- not a single person on this forum.

Yet strangely they are exonerated but the OP isn't?

For some sellers, the purpose of multiple stealth accounts is not only to spread the risk but to actually avoid paying taxes.

If you are going to make a rule, then apply it on everyone. British and non-British alike.

PS: Sorry, just realised it's an old post.

Re: eBay UK VAT crackdown??
 

i use stealth accounts but i pay my taxes on every single item i sell.

for me each stealth account is just another selling channel for a different product line and it allows me to sell a lot more than i could without them

its not an excuse for me not to pay my taxes .

Regards the op's post , i think if you not VAT Registered (sole trader) you will be asked for your UTR (unique tax return) number, which is quite worrying from a stealth point of view.

Re: eBay UK VAT crackdown??
 

And who the hell are you to tell me and others we are liars and we don't pay taxes?

I pay mine thank you very much.

HMRC are one of nastiest bunch in the world to have come after you, it simply is not worth the grief.

Re: eBay UK VAT crackdown??
 

So you pay your taxes using stealth information provided to HMRC?

Give me a break. Who are you trying to fool?

Re: eBay UK VAT crackdown??
 

if you are selling goods to make profit , if you meet the threshold or not, You are still supposed to submit all your information to the tax man and if you are not your breaking that law, Simple.

also i think you need to do some (a lot) of home work on what you are allowed to submit or not .

for example, as far as a tax man/woman is concerned, you could have 50 ebay accounts in what ever name you wanted, it was created with stealth info or not, the point they give a dam about is the TAX Your paying on those sales .

and yes, all my invoices i submit are in the details i create for that pp account, so i submit many invoices in many details and whats more i download them all from paypal

it is not against the law to create a stealth account (might be against ebay and pp rules) but you are not breaking the law in the u.k

it is however against the law not to declare what your selling if you intend to make a profit .

Re: eBay UK VAT crackdown??
 

Thank you for your response.

Say someone has one or multiple stealth accounts registered on names they randomly concocted and then reached their PayPal receiving limit, they would be required to provide a photo ID and proof of address.

Now say this person provides them with the information they need by submitting official documentation like a passport and driver's license based on names they fabricated, can you explain a legal way of doing this in this exact scenario?

Moving on, let's say that person has done all of that and has been selling for a few months with high selling limits on multiple accounts, I found it hard to understand how someone would be able to morally justify breaking the law from one angle, by uploading documentation based on concocted information, and then feel morally obliged to report each and every sale in order to pay taxes.

I do understand that one has to register as Self Employed with HMRC and then submit tax returns annually. Thank you for explaining how you did this yourself.

But this also explains why people would feel the need to report their sales on stealth accounts. Say, a person was legally registered as Self Employed, and was then seeking to claim some sort of government scheme or benefit based on low income. I would understand why this person would need to back up their claims that they sell X and X on X and X trading site for X and X amount. An accountant (or they themselves) would simply collate their invoices together, from multiple stealth accounts, and submit a total gross and net income to HMRC.

This would prove that they are in work and would back their claims in respect to what they sell and for how much including expenses which they will provide separately.

The question is, what if you are not a Sole Trader, and predominately use eBay to buy, occasionally selling things for profit, without being registered as a business seller? It is really astonishing that I still have to report this to HMRC even though I am working full time on the side.

Re: eBay UK VAT crackdown??
 

Quote:

Originally Posted by SpaceZ (Post 852575) The question is, what if you are not a Sole Trader, and predominately use eBay to buy, occasionally selling things for profit, without being registered as a business seller?

If you are buying items to sell for profit, then by definition you are self employed and should register as a sole trader. You have 3 months from your first day to do so.

Quote:

Originally Posted by SpaceZ (Post 852575) It is really astonishing that I still have to report this to HMRC even though I am working full time on the side.

Welcome to the real world, where people pay tax on what they earn. Time you signed up to not being a tax dodger.:boink:

Re: eBay UK VAT crackdown??
 

I have looked in to this. You are wrong.

If you are buying items to sell for profit, on a regular bases with transactions being carried out in a way that resembles shops and real businesses, then you have to declare your sales. The taxman will consider you a business seller even if you refuse to accept yourself as one.

Most of us have learned good manners and argue points with clarity, respect, while keeping good faith with others. Every now and then we come across members who are haughty and arrogant and refuse to back down, while staying logged in only to refute targeted members.

Anyway, apparently there is more to this than most people know. There are around 9 "badges of trade" and if someone meets even one of them, they have to declare their sales to the taxman. I have not copied and pasted them here as it will make this reply very long but they can easily be searched online.

Re: eBay UK VAT crackdown??
 

space, mentioned they do not meet the threshold, is that your only income? well in that case then there is no tax to pay, but you are still meant to declare it.....not sure of consequences if there is no tax to pay, only ever heard of fines plus having to pay the taxes owed...obviously big evasions are more serious........dont know...I suppose the consequences are what matter....

as for being stealth, this does not mean that money is not going in to your banks accs....banks reporting, and also people you know dropping you in it are a couple of ways taxman can find out.....

I do think some stealthers are genuinely scared of opening a can of worms by declaring an income however small, given that they think further questions might get asked on the 'grey area' of stealth registration....

Re: eBay UK VAT crackdown??
 

To Oompaloompa,

Yes, this is also something that has crossed my mind.

If HMRC were to see regular payments being made in to a bank account, they would probably want to see where that money is coming from. Seeing as that money will be from PayPal, they can easily trace it back and request additional information from PayPal directly.

They could probably feel that you haven't declared enough, and maybe there are a few hundreds of pounds still sitting in PayPal that haven't been withdrawn yet.

Now imagine PayPal complying with a government body and showing them the documents you have uploaded. Some people are even submitting Council Tax bills. In fact, it goes further; some have even uploaded passports.

Commenting even further to that "grey area" you mentioned: When the recently fired FBI Director, James Comey had his hearing, he said when the FBI investigate a case and start tapping in to it, they usually come across all sorts of other discrepancies and illegal activities that can be used against the suspect.

I can understand why some stealthers would be scared.

Re: eBay UK VAT crackdown??
 

'Blobby' (who himself has been here less than a year) and his anger issues, comical, must be a riot to live with!

'Pass the salt dear?'
'OMG how dare you, I do not wish to pass the salt!, I am alpha male, *beats chest* RAR'

LMAO

Spacez - there are literally loads of legal grey areas that you, we, are crossing when going Stealth. The sellers in the marketplace commit serious fraud crimes everyday, there is no denying anything of what we do.

Getting scared/living scared is part of the game unfortunately.

Re: eBay UK VAT crackdown??
 

You're right on this. ITs actually easier and less stressful not to open the books to the HMRC, because once you're on their computers, they will come after you for compliance and make your life as difficult as possible.

As we've seen with one member of the forum who has been compliance checked, they do investigate how you have different ebay accounts under different names. I think once they actually cotton on to it all, only take a bright spark in the HMRC to put it all together and have more resources, there will be more being investigated and the lid will be lifted finally.

Re: eBay UK VAT crackdown??
 

I see Blobby is not logged in currently.

So much for that 'I stay logged in 24 hrs a day muppet, if you had been here longer than 5 minutes, you would know that.'

Re: eBay UK VAT crackdown??
 

I think you answered your own question, using stealth eventually the money has to go into a bank or savings account in your name. It would unwise to avoid paying tax as it would only cause more problems in the future.
If you submit an accurate tax return, declaring all income, HMRC will probably be satisfied and you will be left alone.
But if you don’t declare the income and HMRC do find out, then discover the stealth details/documents, not only will you be heavily fined but as you already mentioned you can find yourself in serious trouble with a ⊗⊗⊗⊗ passport.

Although to be honest you have the same probability of an average joe seller not declaring eBay income to HMRC just as much as a business seller.
I helped a friend set up Ebay/Paypal when their parents passed away, he gutted their house and sold the lot on Ebay. From the offset he got an account with 500/£10,000 limits and within 9 months had made around £30k and I know for a fact he didn’t declare this as extra income to HMRC.
Will he get away with it? Probably as he already stopped selling 18 months ago.
If he continued to do this over a few years would he get away with it? Maybe, maybe not. It would depend on what relationship his bank, Paypal or Ebay have with HMRC.

I would also imagine there are other kettles of fish such as people receiving benefits, selling on Ebay and not declaring it.
There are also many reasons why people turn to stealth.

Re: eBay UK VAT crackdown??
 

Interesting thread regarding the UK VAT

Re: eBay UK VAT crackdown??
 

Yes some good points.

I think the 'longer' an account stays open then the risk level is raised, but yes if you do submit all returns, then its more likely you will be left alone - HOWEVER, once you are 'known' to the HMRC, they can request a compliance check at ANY time, and thats whats happened to a previous forum member.

Currently eBay and PayPal only supply information to the HMRC under court order, which they did a few years back when the HMRC did a sweep of large scale business sellers.

The one thing on ones side is that the HRMC is MASSIVELY under resourced, and generally go after tip offs and easily targeted/proved, but thats not to say they wont tap into the rest eventually..

30k in 12 months isnt a huge amount, I think as long as you are below VAT threshold in actual withdrawals, the banks would be less interested if you have a long term relationship with them.

Its all speculation though isn't it?

Re: eBay UK VAT crackdown??
 

No I am not wrong.

If you are buying and selling on ebay to make a profit AND you already have as you have said a full time job elsewhere, then you need to both declare yourself as self employed also AND pay tax on your TOTAL income, since you are likely to have consumed all your personal allowance up.

It really is that simple. Most of us pay tax, but you will always get certain types who wish to dodge them and break the law. If they are 'stealthers' they are also the types who normally want to know about the possibility of being able to be '100% anomynous' and who think it is legal to commit the criminal acts of fraud, misrepresentation and identity theft......Oh wait!:rolleyes:

Re: eBay UK VAT crackdown??
 

with or without the job , you should be reporting it.

Astonishing or not, it is in fact the case.

Just ring your local tax office and ask them.

Re: eBay UK VAT crackdown??
 

Again, nope and nope.

If you are buying items to sell for profit, but only doing this on a regular bases with transactions resembling shops and real businesses, only then do you need to declare these to HMRC.

For God's sake, it does not mean anything and everything you sell for profit must be declared!

If you buy a pair of shoes on sale, decided not to use them and put them away for two months, and then later sold them for a much higher price, are you serious when you say I have to declare that? LOL

Here's a breakdown of what I use eBay for:

I sell things as a hobby and this month I sold two phones, a faulty Samsung S4 that's been sitting in the cupboard for a year, and a used Samsung S7 Edge. I don't sell every month, only when I feel like I have picked up a bargain and then flog it off on either Gumtree or eBay. I have found that eBay gives you a better price as people on Gumtree tend to phone and then come down only to haggle the price further!

Last month I didn't even sell anything but the month before that I sold our old washing machine, though I put it up for Cash on Collection.

Mainly I use my eBay account for buying but I have been banned in the past so this is why it was important for me to open a stealth account.

Please don't tell me I need to declare the two phones and washing machine I sold as that is just completely wrong and totally false information which is quite pathetic to be honest.

Re: eBay UK VAT crackdown??
 

This is just the most stupid information I have read this week. I am working full time on the payroll, why should I register as Self Employed just because of irregular, part time, hobby-like selling on eBay? Are you having a laugh?

Just because you use eBay as business and spend "24 hours a day" logged in here, reading posts and doing your so-called thing of "helping" other eBay business sellers, does not mean I am in the same boat. Keep paying your taxes, my friend. Good for you.

Some of us will just use our stealth accounts for buying and selling occasionally, here and there.

Go learn a thing or two before you start hitting that reply button.

Re: eBay UK VAT crackdown??
 

This means you should be paying tax.

You seem to have a problem understanding these basics.

Keep on being a tax dodger then......the LOWEST of the low.

Re: eBay UK VAT crackdown??
 

Your obscene and weak mind doesn't seem to understand that NOT EVERYTHING YOU SELL FOR PROFIT must be declared!

Keep being patriotic and pay your taxes, Mr "B-L-O-B-B-Y", lol

Re: eBay UK VAT crackdown??
 

It does if you buy it with the intention of making a profit.

Keep telling yourself you are not a tax dodger and breaking the law.

You are though, no matter how much you keep denying it. Everyone on the forum with an ounce of intelligence can see it. You have even admitted it. Well played!.

Re: eBay UK VAT crackdown??
 

Who the hell are you to tell me I am not paying taxes? I work and pay taxes on my job, you idiot. I don't have any other job. What's so hard to understand about that?

Does making 50 quid on eBay sound like trade?, you waste man.

I don't "trade" on eBay in the technical sense. I am working and occasionally, say every couple of months, sell a thing or two.

So practically everyone who sells on Gumtree has to declare their sale? Keep dreaming, mr patriot.

Re: eBay UK VAT crackdown??
 

**LOUD VOICES!**

HMRC:

"Selling goods or services

You could be classed as a trader if you sell goods or services. If you’re trading, you’re self-employed.

You’re likely to be trading if you:

sell regularly to make a profit
make items to sell for profit
sell online, at car boot sales or through classified adverts on a regular basis
earn commission from selling goods for other people
are paid for a service you provide

You’re probably not trading if you sell some unwanted items occasionally or you don’t plan to make a profit. You can’t use any losses you make as part of a hobby to reduce your tax bill."

Buying and selling for a profit, income should be declared.

Selling old washing machine you had knocking about, no one cares.

Re: eBay UK VAT crackdown??
 

You have misunderstood it completely if you think any level of buying and selling for profit has to be declared.

It's only if you sell regularly with the intention to make a profit, or are regularly buying and then selling those items order to make profits.

Where do you think traders gets their stock? They regularly buy of course. Then they sell.

They may be buying a few large boxes of items every few months, or a pallete once a year. It's all the same thing and is classed as trading.

Even if they buy in wholesale once a year, it's still trading since they are selling significant quantities of items from that single order from their supplier.

I use my eBay account to buy regularly but I actually keep the items I use, I don't sell them at all. These are usually cheap and low quality items that, if anything, would probably give me a loss had I planned to sell them. In fact, after using them, they would probably never sell at all.

The phones I sold were old and used. The S7 edge was used with tiny cracks (had dropped it) but is the only thing that made me a profit of £50. There is no way I am obliged to report that since it's an old item that I used for some time, have not purchased in multiple quantities, and had used it significantly (for around 10 months) before selling on.

So I repeat, buying regularly to sell for profit, or selling regularly in order to make profit are considered trade. At least 2 members of this thread have understood this wrong.

Re: eBay UK VAT crackdown??
 

I think there may have been some confusion in this thread. From looking at the forum most users seem to be business sellers, so you have been given advice based on being a business seller. This is where the difference between private and business sellers comes it to play.

Private seller - can buy a S7 edge (for example) use it and sell it on Ebay. Or can buy the same S7 edge and a year later it remains unused, sells it on Ebay to recover the cost. In both instances this would not need to be declared.

Business seller - buys the same S7 edge as above but buys it with the sole intention of selling it on to make a profit. This would need to be declared.

You do not need to pay tax on anything earned from private sales, if you sell off your own personal possessions.
You become a business seller when you sell items that you bought (or made) specifically to make a profit and should register with HMRC within 3 months of starting.

In addition a business seller can also have a private seller account on Ebay, only if they use this account to sell personal items.
All this said and done, there are still a lot of sellers on Ebay who are not declaring income.

Re: eBay UK VAT crackdown??
 

the OP was abroad, and was asking about VAT anyway...

Discussion was not relevant to the OP...there would not be consequences on the income side, as far as UK is concerned...

In terms of income, someone abroad or very small sellers do not bother to register...eg. a student who has no other income and sells 10k a years worth to pay for studies etc....if there would be no tax to pay, then I would not think there is a penalty

Re: eBay UK VAT crackdown??
 

Id you registered in different country you do not need to register for vat in Uk until your turnover reach up to Vat threshold in UK , after that you need to register in UK and pay vat here to

Re: eBay UK VAT crackdown??
 

PLEAS HELP!!
Im lost, but would like to clarify the original post question, for myself.
BIG DIFFERENT BETWEEN PROFIT TAX & VAT.

We all pay TAX on our PROFIT, but if the TURNOVER goes past the VAT threshold £83k, is it illegal to create more companies and ebay accounts to spread the load?

For example, we have 1 ebay account, TURNOVER £160, per year.
From that is around £40k clear PROFIT, per year.
We pay our 20% Corporation tax on the £40k, which is around £8, going to the tax man.

BUT - if we now have to register with VAT, we would have to pay the Corporation Tax 20% on PROFITS £8, PLUS the 20% VAT on the TURNOVER (£32k).
Which basically makes the business not worth running.

PRODUCT PRICES CAN NOT BE INCREASED, AS WE WOULD NOT SELL ANYTHING, AND WE CANT SIMPLY PASS THIS VAT COST ON TO OUR RETAIL CUSTOMERS.

---------

So... PLEASE READ AND ANSWER:
is it legal to create 2 or 3 company's & an ebay account for each one, spreading the products across them... however all being registered to one LEGIT person or Company director?

As an example out of this, we would now run 2 companies, TURNING OVER around £80k on each company, paying the 20% Corporation Tax on the £20 PROFIT of each one, but avoiding the VAT 20%!

Re: eBay UK VAT crackdown??
 

Speak to an accountant.