TRADING ON E-BAY MAY INVOLVE A TAX LIABILITY

Trading on E-BAY is growing more popular and for many it has become a regular 'hobby'.

It is unlikely that many people will have considered the tax implications of selling items on the internet. Taxpayers should be clear that there is no difference between this form of selling and any other method of selling goods.The Inland Revenue are sure to show more interest in this form of trading and it will undoubtedly prove to be a rich source of additional revenue for the authorities.

Not all sales are taxable; sales of unwanted household items will usually involve low value and be covered by the capital gains tax chattels or annual exemptions. Where items are bought (perhaps at a car boot or rummage sale), held for a short time then sold on, the Inland Revenue are likely to take the view that there is a taxable trade, particularly where there are frequent transactions. Even single transactions can be treated as a taxable trade if the intention when buying the item was to sell it at a profit. Where an established trader also sells items on E-BAY care should be taken to ensure that, where appropriate, the sales are included in the business accounts and VAT accounted for as appropriate.