Tax Clampdown/ Side Hussles/ eBay/ HMRC Use of AI

[DRD]

There is a lot of talk in the tax community about HMRC changing its approach and more aggressively pursuing self employed people/ side hussles etc

People that might have never been 100% on time with every filing suddenly get hit with a fine with no warning despite owing no tax. And quarterly filings for landlords and the self employed are coming in next year.

HMRC is scraping data from eBay, your bank account, car purchases, house purchases, your social media postings etc etc to flag folk whose apparent lifestyle does not match their tax return. HMRC's powers now allow it to take money directly out of your bank account WITHOUT court warrant.

Loads of videos online about this. Here is an example

But essentially, stay frosty, make sure you NEVER miss any deadlines, keep detailed records so that you can comprehensively respond to any enquiry.

Your twice a year £5000 pinball sales on eBay will probably be getting picked up. These are not subject to capital gains (they are wasting chattels like wine) or income tax unless you are a regular trader - but something like this could open the door to an HMRC letter.

 

[lukewells]

I assume any pinball sale on ebay is going to flag you up for investigation by HMRC at some point

 

[Taxiturn]

Fines for late filing are not new, and yes they can still apply in some cases even if you have no tax to pay. There is always warning - usually multiple letters asking to file returns and then further rounds of correspondence before the fine gets any higher than £100.

HMRC using direct recovery of debts (DRD lol) to take money from a bank account is a last resort in cases of long-term non-compliance and requires all sorts of correspondence to be wilfully ignored to get to that point. I expect it will probably only be used in the order of tens or low hundreds of times per year. They aren’t just going to help themselves for no reason.

The tax rules around the “badges of trade” have not changed, so eBay sharing information with HMRC should be of no concern to you unless you have been running an eBay shop or similar trading business without declaring your profits. A couple of personal machine sales per year is not going to put you at risk.

 

[DRD]

Fines for late filing are not new, and yes they can still apply in some cases even if you have no tax to pay. There is always warning - usually multiple letters asking to file returns and then further rounds of correspondence before the fine gets any higher than £100.

I never want to contradict the good people of Pinballinfo, but this is totally untrue.

Fines regarding PAYE filings, with zero monthly salaries paid, zero PAYE to pay, having been submitted identically for 10 years plus have led to fines this year. I have seen this with my own eyes. No letters were sent to warn.

 

[MarkS]

Fines regarding PAYE filings, with zero monthly salaries paid, zero PAYE to pay, having been submitted identically for 10 years plus have led to fines this year. I have seen this with my own eyes. No letters were sent to warn.

Fined for what?

 

[Taxiturn]

I never want to contradict the good people of Pinballinfo, but this is totally untrue.

Fines regarding PAYE filings, with zero monthly salaries paid, zero PAYE to pay, having been submitted identically for 10 years plus have led to fines this year. I have seen this with my own eyes. No letters were sent to warn.

Oh so you’re talking PAYE RTI penalties rather than self-assessment. Nil returns are often still required (unless HMRC are notified of the period of activity) so yes, if they aren’t submitted or are submitted incorrectly then penalties can still be due and would be issued automatically.

 

[DRD]

If you are self employed/ company director it is quite common to pay yourself one salary per year to avoid admin/ making 12x salary payments, 12x paye payments to hmrc, 12x income tax payments etc etc.

So you are supposed to make monthly nil returns. Ie no salary April, no salary May, no salary June etc These have to be submitted electronically using appropriate software or the free HMRC PAYE Basic Tools package.

For 10 years HMRC was quite relaxed about this. If you missed a month it was no big deal. You might miss several months then just submit several months nil returns at a time.

But this year no letters, no warning, no email, a straight £100 fine in the post when no salary paid ytd, no paye due, same behaviour as in the previous 10 years.

It feels like there is a totally different approach. The quarterly reporting coming in next year could be a huge PITA for affected folk