Web Bots Are Out to Get You!
The Taxman has announced he is going to start targeting tax evasion by online traders, private tutors, personal trainers and life coaches.
In order to find out who is failing to pay tax on all their income the Taxman is to send out web bots (automatic search programmes), to trawl the internet for data on sales and services advertised by UK residents. This data will then be compared to sources the Tax Office holds such as bank interest and tax returns.
If you declare all of your profits and earnings on your tax return you have nothing to fear. But you may have friends or family members who earn a little bit on the side by selling stuff or advertising their services online, so please pass on this advance warning.
For example, a hobby making decorative items could lead to selling the products at a market or through a website. A common misconception is that if no profit is made the income source does not need to be declared. Unfortunately the Taxman is unlikely to agree. Where the costs are not recorded any income will be treated as profit, and thus will amount to taxable income. The same applies to private tuition; even if the turnover is very small it must be declared where there is intent to make a profit from the activity.
Those online traders or private tutors who have not declared this source of income to the Taxman and who are not registered for self assessment, should contact the Tax Office by 5 October 2011 to notify them there is income received during the 2010/11 tax year. The best way to do this is to complete the self assessment registration form CWF1, either online or in paper form. The Taxman will then issue the individual with a tax return form to complete for 2010/11.
Where the individual has traded online for several years without declaring the income, a more detailed disclosure to the Tax Office will be required. It is recommended that you seek professional advice before approaching the Tax Office, as such a situation needs to be handled very carefully!
The author does not guarantee the accuracy of any information provided in this article and recommends that you do not take any action, whatsoever, based on the information provided. By the fullest extent permitted by law, the author does not accept any responsibility for any actions you may or may not take based on information contained in this article. This article contains general information and is not a substitute for specific independent professional advice. In addition it is emphasised that much of the information provided in this article is time sensitive and information contained within it may be out of date.