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Online trading 'faces extra scrutiny'

03 February 2009
Categories: News , Admin
Warning of HMRC probe of social sites and blogs

Accountants can expect their clients’ online trading activity to be increasingly scrutinised by HMRC for taxable activities, tax veteran Mark Lee has warned.

This probing by the Revenue of social media and blogging websites is an extension of the department’s long-time practice of monitoring small ads in local newspapers and, more recently, eBay and other online auction offerings, said Mr Lee, who is chairman of the Tax Advice Network.

He suggested that the traditional questions accountants ask clients about new sources of income should be expanded to ensure that clients don't overlook online taxable activities.

‘There are two issues here,’ he said. ‘The first is the evidence that some people create online when they start a new business venture. Does the subsequent notification to HMRC accord with the evidence left through blogs and messages on social networks?

‘The second issue is the wide range of new sources of taxable income that could be overlooked by clients – especially the 'non-working' spouse whose tax return has not previously reflected trading income.’

Mark added: ‘As a result of blogging or dabbling in social networks, clients could be generating income through affiliate links with Amazon, Google Adsense, or other less well known businesses.

‘Clients could also be making direct sales online through a blog, a simple website, a white label site or a squeeze page [a page designed to force visitors to opt into a site]. The possibilities are endless.’

He concluded: ‘The point is to be aware that HMRC are looking, or could be looking, and that they could check back later if they have reason to think a person has not been truthful. Advertising items on eBay or through marketplace adverts on social business networking sites can be evidence of trading and the obligation to report’.

Categories: News , Admin
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