HMRC has been urged to defuse a tax bombshell threatening online traders, by the
Low Incomes Tax Reform Group (LITRG).
The LITRG, which is part of the Chartered Institute of Taxation (CIOT), says the
tax authority must take action in order to make sellers aware of the fact that
they may need to file a tax return and pay tax on their online trading income.
The group said that although there is no change to existing tax rules, HMRC will
have more information on who is earning income via online platforms and will be
more able to find out who owes tax on their earnings.
The LITRG argues that the new reporting rules could 'cause chaos' for
taxpayers when the first reports are sent to HMRC and sellers in early 2025.
It has called on HMRC to strengthen its guidance for sellers using online
platforms and standardise information so that users can easily understand it and
report earnings by tax year.
Claire Thackaberry, Technical Officer at the LITRG, said:
'There are just over three months to go until HMRC starts getting information
about the income and activities of people who use online platforms to make
money. We are concerned that we will see the same chaos and confusion that
arose when the rules first came into effect.
'Time is running out for HMRC to defuse this ticking time bomb. The
information that HMRC will receive from platforms will be presented by
calendar year, therefore covering more than one tax year. This could make it
more difficult to work out when tax is due.'
Internet link: CIOT