Tax crackdown to target businesses on Airbnb and eBay (Wired UK)
“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 that taxpayers themselves report to HMRC”.
With the 31 July tax deadline just days away, Funding Options claims that it is not widely recognised that small businesses, as well as filing their self-assessment tax returns by the end of this month, must also make an up-front payment of 50% of their annual tax liability in one lump sum.
Asset seizure is a now a realistic effect of failing to pay tax bills on time, with HMRC under pressure to increase its tax receipts. “Pre-filling or pre-populating information in this way will help to reduce error and improve overall compliance”.
“Data can be particularly powerful when it is collected from third parties who facilitate trade, either between businesses, or between businesses and consumers”, the consultation document said.
“The government has now announced its intention to legislate to extend access to two similar sorts of data to help tackle the hidden economy”.
HMRC’s extended powers would most likely affect businesses that act as intermediaries, or which provide electronic payment services. These powers were streamlined in 2011 and 2012, enabling HMRC to demand information for the payment of all taxes with the exception of customs and excise.
The consultation paper [PDF] doesn’t actually mention any specific sites, but its wording clearly suggests that HMRC wants people who rent sofabeds to European tourists to start declaring the money they make, along with those who’ve built a career out of buying things in pound shops for £1 and selling them online to people who don’t live near pound shops for £1.59. “In doing so, HMRC proposes that the legislation is “future-proofed” so similar data can be requested from new business models as they emerge”.
HMRC said the consultation and proposed changes were focussed on making it easier for businesses to report taxable income while also “narrowing” the hidden economy tax gap.