Tax and eBay

[Cloud2956]

Dear Uk Business Forum Community, I run a Ltd company, all taxes up to date, we are a buyer and seller of product

We have one business account on eBay where we pay extortionate amounts of eBay fees

We also have a couple of private accounts for items where there isn’t much profit margin, to benefit from eBay free listing fees, all moneys still go into the business bank account and is taxed as income on company tax return

EBay have today sent a message saying they are reporting the eBay personal account owner to HMRC for earning over £1700 in the year What happens next? Are HMRC going to try and tax us twice? Once through the Ltd company and once personally? Or do we explain that it’s already being taxed? Thanks

 

[numbersrule]

Dear Uk Business Forum Community, I run a Ltd company, all taxes up to date, we are a buyer and seller of product

We have one business account on eBay where we pay extortionate amounts of eBay fees

We also have a couple of private accounts for items where there isn’t much profit margin, to benefit from eBay free listing fees, all moneys still go into the business bank account and is taxed as income on company tax return

EBay have today sent a message saying they are reporting the eBay personal account owner to HMRC for earning over £1700 in the year What happens next? Are HMRC going to try and tax us twice? Once through the Ltd company and once personally? Or do we explain that it’s already being taxed? Thanks

If the income via the personal eBay account goes directly into your business account then it sounds like there may be a clear digital trail which would be readily accessible evidence.

It sounds like you can be honest open and transparent whilst at the same time having nothing to fear regarding HMRC.

In fact you might have a bigger issue with eBay than any issue with HMRC.

 

[Porky]

Are ebay paying the funds into the LTD company account or are they paying it to your personal account and then you transferring it to the LTD company?

If the payments are going directly to the ltd company and recorded as sales i can't see an issue with HMRC

It's either business or personal sales. As the previous poster pointed out the issue is more likely with ebay but there are probably loads of business on ebay on free private accounts and in not sure how bothered ebay are providing they are getting regular fees.

 

[Ziggy2024]

The personal tax and corporation tax are not automatically linked so I disagree with the other posters here that you have nothing to worry about with HMRC.

If HMRC decide to investigate these then they will assess tax on the income that is under the personal names of the eBay accounts. This is because the income legally belongs to the owner of that account. It is irrelevant that it is paid into the company bank account. You could convince HMRC to treat the income as company sales, but if they don't accept that then you would have to unwind the transactions in the company as well as paying the personal income tax.

Bit of a mess really, you may not have the investigation and miss out on all of this. eBay could charge you business fees if they found out and / or freeze the accounts you have as you've breached their terms.

 

[MyAccountantOnline]

....

We also have a couple of private accounts for items where there isn’t much profit margin, to benefit from eBay free listing fees, all moneys still go into the business bank account and is taxed as income on company tax return

....

Are the sales company sales or your private sales?

If you are selling privately using a personal account is that really company income?

Who is buying the stock you are selling?

Bear in mind you and your limited company are separate 'people'.

 

[Daybooks]

HMRC are not going to try and tax you twice. They want you to complete your due returns of income as prescribed in law. One for your personal income and one for your business income.

How you choose to do those self assessment returns is for you to decide. On balance it seems like a lot of extra work; but I am not sure what the perceived or otherwise benefit of the arrangement was.

 

[DontAsk]

but I am not sure what the perceived or otherwise benefit of the arrangement was.

Avoidance of eBay business fees according to the OP. They could offset the fess they saved against the tax they may have to pay, and learn their lesson.

 

[AlanJ1]

and learn their lesson.

And a very good chance they will get banned on eBay for trying to manipulate the system.

OP you don't pay extortionate fees on eBay, you pay the price to get your products in front of millions of customers. Open your own web store and work out how much that would cost you.

 

[Cloud2956]

Are ebay paying the funds into the LTD company account or are they paying it to your personal account and then you transferring it to the LTD company?

If the payments are going directly to the ltd company and recorded as sales i can't see an issue with HMRC

It's either business or personal sales. As the previous poster pointed out the issue is more likely with ebay but there are probably loads of business on ebay on free private accounts and in not sure how bothered ebay are providing they are getting regular fees.

Yes, paying the funds straight into the company account, and being recorded as sales, personal details on eBay is the directors name followed by company name and company address

Are the sales company sales or your private sales?

If you are selling privately using a personal account is that really company income?

Who is buying the stock you are selling?

Bear in mind you and your limited company are separate 'people'.

Company sales, company is buying it, company is selling it

And a very good chance they will get banned on eBay for trying to manipulate the system.

OP you don't pay extortionate fees on eBay, you pay the price to get your products in front of millions of customers. Open your own web store and work out how much that would cost you.

We could spend all day talking about different dynamics including how much tax eBay and other large companies avoid, also how many regular businesses are using private accounts but not paying any tax whatsoever, we have our own web store, and believe me eBay get/have had their fair share of blood out of us over the years; we are paying all of our tax, whether we are worrying about a multi corporation like eBay losing a few pounds isn’t part of this discussion and is a moral discussion for another thread

 

[AlanJ1]

We could spend all day talking about different dynamics including how much tax eBay and other large companies avoid, also how many regular businesses are using private accounts but not paying any tax whatsoever, we have our own web store, and believe me eBay get/have had their fair share of blood out of us over the years; we are paying all of our tax, whether we are worrying about a multi corporation like eBay losing a few pounds isn’t part of this discussion and is a moral discussion for another thread

No I disagree, what you are doing is getting around T&Cs on eBay and selling items on accounts you should not be selling on. Absolutley irrelevant what eBay do and do not do. You will be effecting other sellers who are playing by the rules. Just like companies who try dodge paying VAT to be 20% cheaper this is pretty much the same.

What eBay and other corporations do I don't agree with of course but it is a totally different conversation to what you are doing. As the saying goes FAFO.

 

[DontAsk]

Yes, paying the funds straight into the company account, and being recorded as sales, personal details on eBay is the directors name followed by company name and company address

That's just text in the address fields. It's a personal account and eBay is bound by law to report certain personal accounts to HMRC for payment of tax due.

You tried to evade eBay fees and now need to sort out the mess. If I were a HMRC inspector I would be taking a pretty dim view of things.

 

[Cloud2956]

No I disagree, what you are doing is getting around T&Cs on eBay and selling items on accounts you should not be selling on. Absolutley irrelevant what eBay do and do not do. You will be effecting other sellers who are playing by the rules. Just like companies who try dodge paying VAT to be 20% cheaper this is pretty much the same.

What eBay and other corporations do I don't agree with of course but it is a totally different conversation to what you are doing. As the saying goes FAFO.

We have gone completely off topic, as you say it is a completely different conversation but you’ve taken it there, we’ve gone from it not being tax avoidance to it being fee avoidance of a large American company who do not pay tax in the first place, plus if you knew anything about eBay you would know that as of last week there is a fee for buyers when they buy off of a private seller anyway, so eBay isn’t losing anything, business sellers aren’t losing anything as there prices are now the same again and the seller isn’t losing anything

That's just text in the address fields. It's a personal account and eBay is bound by law to report certain personal accounts to HMRC for payment of tax due.

You tried to evade eBay fees and now need to sort out the mess. If I were a HMRC inspector I would be taking a pretty dim view of things.

I’m still not sure there’s anything to sort, my accountant says there is no issue as did a couple of others above, luckily you aren’t a tax inspector, this isn’t tax avoidance, this is avoid American companies astronomical fee avoidance

 

[DWS]

We have gone completely off topic, as you say it is a completely different conversation but you’ve taken it there, we’ve gone from it not being tax avoidance to it being fee avoidance of a large American company who do not pay tax in the first place, plus if you knew anything about eBay you would know that as of last week there is a fee for buyers when they buy off of a private seller anyway, so eBay isn’t losing anything, business sellers aren’t losing anything as there prices are now the same again and the seller isn’t losing anything



I’m still not sure there’s anything to sort, my accountant says there is no issue as did a couple of others above, luckily you aren’t a tax inspector, this isn’t tax avoidance, this is avoid American companies astronomical fee avoidance

It comes down to who the contract of sale is with, does the buyer believe they are buying from you personally or your Company?
If there is a problem with what you sell are you liable legally or your Company?

 

[AlanJ1]

we’ve gone from it not being tax avoidance to it being fee avoidance of a large American company who do not pay tax in the first place, plus if you knew anything about eBay you would know that as of last week there is a fee for buyers when they buy off of a private seller anyway, so eBay isn’t losing anything, business sellers aren’t losing anything as there prices are now the same again and the seller isn’t losing anything

You brought up tax avoidance when I was always talking abut you fee avoiding. I simply just made another example of what sellers like you do to try gain an unfair advantage versus proper and honest sellers.

Yes I know about the fee but it doesn't matter, you still created private accounts to try and avoid paying eBay what you should pay as a BUSINESS seller.

I’m still not sure there’s anything to sort, my accountant says there is no issue as did a couple of others above, luckily you aren’t a tax inspector, this isn’t tax avoidance, this is avoid American companies astronomical fee avoidance

Most likely there wont be anything to sort as you have paid it through your business on a tax side. However it won't be long till all of your business and private accounts get banned. Heard this story many times.

 

[Daybooks]

Avoidance of eBay business fees according to the OP. They could offset the fess they saved against the tax they may have to pay, and learn their lesson.

That being the point. Perception rather than reality.

 

[Frank the Insurance guy]

It comes down to who the contract of sale is with, does the buyer believe they are buying from you personally or your Company?
If there is a problem with what you sell are you liable legally or your Company?

Off topic but a really good point. I'm no lawyer but I expect a buyer is contracting with the personal account on ebay - therefore making the individual personally liable for the goods sold! If there was an injury caused by the product, the buyer would sue the seller (ie. personal account). The company's business insurer would not provide any cover as it was not the company that "sold" it.

 

[Cloud2956]

You brought up tax avoidance when I was always talking abut you fee avoiding. I simply just made another example of what sellers like you do to try gain an unfair advantage versus proper and honest sellers.

Yes I know about the fee but it doesn't matter, you still created private accounts to try and avoid paying eBay what you should pay as a BUSINESS seller.



Most likely there wont be anything to sort as you have paid it through your business on a tax side. However it won't be long till all of your business and private accounts get banned. Heard this story many times.

Thanks for your post, to be fair you make some valid points, I have now changed the said account into a business account and just increased the prices, this should now draw a conclusion

 

[Cloud2956]

Off topic but a really good point. I'm no lawyer but I expect a buyer is contracting with the personal account on ebay - therefore making the individual personally liable for the goods sold! If there was an injury caused by the product, the buyer would sue the seller (ie. personal account). The company's business insurer would not provide any cover as it was not the company that "sold" it.

Another valid point