HMRC targets Airbnb owners and eBayers

HMRCPeople who are running online businesses through an app store or listings site such as online auctioneer eBay or lettings portal Airbnb, could be about to be hit by a new government crackdown on tax evasion.

Under new rules, Airbnb, Apple, Amazon, eBay and Gumtree could all be required to hand over user information to the government.

HM Revenue & Customs has proposed an extension of its powers to go after businesses that make money online and don’t declare it.

It said the “hidden economy” cost the treasury £5.9bn a year in lost tax revenue.

The information HMRC will require is likely to include names and addresses of sellers, advertisers and app developers on a variety of platforms as well as the value of transactions made.

HMRC doesn’t name any companies in its consultation document but does outline the areas it will target: advertising, app stores and booking and reservation services. As such it is likely Amazon, Apple, Airbnb and Gumtree will all be required to hand over details of businesses operating on their platforms.

HMRC explained that data provided by these companies could be compared against data it already holds, allowing it to spot tax evaders. It said clamping down on tax revenue lost in this way could raise £860m by 2021.

Martin Bell
Martin Bell

Martin Bell, Tax Dispute Resolution partner in Scotland at BDO, said: “This announcement is a further example of tax authorities, in this case the Irish Tax & Customs, using legal powers to obtain information on large groups of individuals where it is believed tax is owed. Here in the UK, Schedule 36 of the Taxes Act gives HMRC powers to demand that third parties, such as private businesses, hand over data where there is a suspicion that tax is being underpaid on a wide scale. If HMRC were to follow a similar path for Airbnb clients, as we saw with previous initiatives targeting Ebay sellers and holiday letting websites, and obtain information such rental income derived, people will not only be obliged to pay back taxes with interest but could also be stung with penalties.”

“The ‘sharing or peer to peer or collaborative economy’ remain governed by the same tax rules that apply to everyone else. The thing to remember is that income is still income and where this is taxable, a legal obligation to notify and declare any relevant taxable income to HMRC still applies. For example, rental income that landlords derive through web based sites such as Airbnb. While it remains too early to say whether or not we will see tax policy evolve and in future specific tax rules aimed at this new growing economy, it is certainly fair to say that the ability to generate income through the sharing economy is not lost on HMRC. They have teams of analysts reviewing online information and any online advertisement to rent out a private room is as good as an advertisement to HMRC telling them you may have something to declare.”

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