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HMRC profiling e-auction websites?

If I kept up with technology (IT devices, skis, technical clothing, etc), and could afford it, I would be replacing my old “kit” every 3 months.

What would I do with the old kit – sell it on e-Bay?

Clearly, this would not be trading. Why, because I believe the “losses” arising are simply not commercial in the sense that there is no business venture – it is not commercially viable as I could not sustain such losses. This is just one example of “hobby” trades, a bit like a car boot sale.

However, contrast that with an adventure in the nature of a trade, but still using eBay as the e-auction facilitator. 

Now that HMRC is in the 21st Century they have identified that some people are trading through e-marketing. HMRC say:-  

An e-marketplace is an online market, or online shop, where buyers and sellers trade with each other over the internet. They might buy and sell goods or services, or a combination of both. A separate company, a 'third party', runs most e-marketplace websites. They let you advertise or auction your goods or services on their website, and usually charge you a fee for this service - either for using their site, the amount you sell your goods or services for, or both.”

If only it was so simple to distinguish trading from hobby income?  

The beneficial terms in HMRC’s e-Markets Disclosure Facility (“E-MDF”) closed in June 2012, and it is to be expected that a batch of enquiries will be sent to those names and addresses HMRC might have obtained through their information and access powers, or “web crawlers”.

Tax legislation struggles to define trading - intentions to trade are not the same as actually trading. For instance, a person may intend to supply services, even register with an online directory, but for one reason or another not commence that business but take another route. Experience suggests that HMRC may, through Internet search techniques, identify an intention to trade and build a subsidiary trading theory.   

Anyone wanting advice should contact Tax Networks Ltd, as definition of trading is a grey area and so is countering HMRC conjecture.