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The recent conviction of John Woolfenden for failing to pay almost £300,000 worth of tax to HMRC on trades he made on Ebay highlights the responsibility placed on private traders to disclose their earnings and to pay the correct amount of tax.

While regarded as an extreme case Ebay traders should declare their earnings or risk falling foul of the law. 

Mr Woolfenden was sentenced to 2 years imprisonment as a result failing to declare tax on his online DVD, music and games business which traded over 400,000 items of stock with a turnover valued at £1.4 million.

He pleaded guilty to failing to declare monies from online trading with intent to defraud HMRC and concealing, disguising, converting or transferring criminal property, namely monies, from unpaid tax. 

While it is unlikely that those selling personal items on an occasional basis would have to declare their income, those who sell on a repetitive basis for profit could be classed as trading and would be expected to pay tax. 

HMRC have published a “badges of trade” that can be applied to determine whether sales qualify as trading and so should be registered for tax purposes.

What is clear however is that HMRC are actively pursuing tax evaders and launched its e-marketplace campaign in 2012 to encourage traders to be transparent about their tax affairs.
 

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