Tax issues when transferring money via goods & services?

[MathProfessor]

I have a real paypal account linked to my real name. It receives money from a couple of stealth accounts. In the past, I tried sending money via friends and family, but PayPal doesn't like that and many accounts got limited. (But not my main account; I've had that one for 9 years without issues)

I've started transferring via goods and services, adding comments like "maths lessons", and paying PayPal their 3% "tax". These transactions go through without problem.

The question is, will I have HMRC on my back because of all this money I'm making from "maths lessons" ?

[agent006140]

whether it is math lessons or yoga lessons ,it is counted as your income.

[agent006140]

so what is happening is that your stealth accounts are paying Paypal transaction fee and 2.9%,then when they sent $$ to your real account,you are paying another round of fee?
so in total you are paying 2x transaction fee and 2.9% x2 ?

[james_112233]

Well obviously ...

It's only a matter of time. You cant expect your bank balance to keep getting bigger and you can't expect the bank not to report your annual income to HMRC at some stage.

If you definitely don't want them coming after you, pay your taxes.

[agent006140]

OR if you can transfer fund out of his stealth accounts instead of sending them to his real account,
Or use the stealth fund to buy something he needs or pay his bills.

[MathProfessor]

Originally Posted by agent006140

so what is happening is that your stealth accounts are paying Paypal transaction fee and 2.9%,then when they sent $$ to your real account,you are paying another round of fee?
so in total you are paying 2x transaction fee and 2.9% x2 ?

No, I only pay the transaction fee once.

It's a somewhat complicated setup, but a concise summary is that I have a few primary accounts and around 20 secondary accounts:
Primary A - Connected to Bank A
Primary B - Connected to Bank B
Primary C - Connected to Bank C

Secondary a1, a2, a3, pay into Primary A for "math lessons", Primary A withdraws to bank A

Secondary b2, b2, b3 pay into Primary B for "yoga lessons", Primary B withdraws to bank B

etc.

Each primary withdraws around 1000 GBP/week.

I suppose there are 2 questions here:
* Do the banks report this to HMRC
* Does paypal report to HMRC

Part of the issue is that while the bank accounts are all in my name, most of the paypal accounts are in my friends' names. I need to know if my friends are going to get a letter from HMRC demanding tax payment....

[MathProfessor]

Originally Posted by tinsoldier

There is absolutely no way a bank will report a customer to HMRC for accepting small PayPal deposits.

In any event, OP is not even withdrawing the money to a bank account, they’re transferring it as “goods or services” to another PayPal account.

Will HMRC catch them? Extremely unlikely I would say, they will not be reported by eBay or PayPal.

How much is "small" ?

The money is transferred "goods and services" but is withdrawn eventually.....

[MathProfessor]

Originally Posted by agent006140

OR if you can transfer fund out of his stealth accounts instead of sending them to his real account,
Or use the stealth fund to buy something he needs or pay his bills.

I agree with you; however, I have more stealth accounts than bank accounts and therefore some transfer is necessary.

I spend a lot from stealth accounts, but I still make more than I can spend and I don't want to leave large amounts of money in PayPal.

[agent006140]

then you need to consolidate your stealth accounts,if thats feasible.

[MathProfessor]

Originally Posted by agent006140

then you need to consolidate your stealth accounts,if thats feasible.

Well I am essentially consolidating them, the issue is that I have roughly 50k+ GBP across a couple dozen accounts and I want to withdraw it. (I had another reply in this thread with more information but I think it hasn't been approved by a moderator yet.)

But basically I have a handful of paypal accounts linked to bank accounts, and a larger collection of paypal account which receive money. The question is how to extract the money.

Thus far I've been drip-feeding the lesser accounts into the main accounts, but the question is.. will this trigger an HMRC problem in any of my bank accounts or paypal accounts. Especially as some of the paypal accounts are in my friends' names...

[JamesNorth101]

Originally Posted by tinsoldier

No and no.

Not totally true

PayPal and HMRC do have information sharing

Its on a account by account basis though so if its a small amount its highly unlikely, but its still is possible

[JamesNorth101]

If HMRC suspect you’re not paying as much tax as you should they can go to PayPal and request details of the account even if the activity itself isn’t fraudulent

There’s quite a few news articles about all of this when the powers were introduced back in 2017

[james_112233]

I'd rather sleep well at night by paying what I owe.

There really isn't much you can do with undeclared cash other than blow it all on a good time. Let's be honest. Doing legitimate things in this world require you to prove where your income has come from. Buying a property, expensive car, starting a business etc.

[MathProfessor]

Originally Posted by james_112233

I'd rather sleep well at night by paying what I owe.

There really isn't much you can do with undeclared cash other than blow it all on a good time. Let's be honest. Doing legitimate things in this world require you to prove where your income has come from. Buying a property, expensive car, starting a business etc.

This is a good point in the long term. In the short term, I want to get some cash out of these accounts before anything happens, and part of my concern is whether or not any of my friends will get any unexpected messages from HMRC.

[JamesNorth101]

Just pay your taxes....