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UK plots crackdown on digital tax dodgers

UK plots crackdown on digital tax dodgers
Jamie Rigg
Jamie Rigg|@jmerigg|July 28, 2015 10:25 AM

The government probably has enough info on us to know what we had for breakfast this morning, but the taxman doesn't really care what fruit you liven up your porridge with. HMRC is interested in getting every last penny it's owed, however, especially money tied up in the UK's digitally driven, "hidden economy." HMRC estimates that it lost out on almost £6 billion in the 2012/13 tax year thanks to undeclared earnings from businesses operating on digital platforms like eBay and Airbnb. Thus, it's proposing changes to legislation that would extend its data-gathering powers to identify who's responsible for the shortfall, and where it's stashed.

HMRC revealed its plan in a recent consultation document, which opens the floor to discussion on legislative changes before they go through. In it, the taxman proposes to expand its data-collection activities "to business intermediaries and electronic payment providers." In the same way HMRC looks at your banking history to make sure you're paying enough tax, it's asking for similar access to data held by digital platforms to seek out those "concealing sources of income." While it doesn't name names, the document notes that "intermediaries operate across many industries, for example for restaurants supplying take away food; for hotel booking; or to enable ticket resale for events."

This may sound like HMRC wants to go after websites that handle online referrals, and your local curry house that siphons money from JustEat orders in an anonymous PayPal account. But, it could have a much wider reach, depending on how deep Her Majesty is willing to dig. You see, if you resell car-boot nicknacks on eBay or top up the rainy-day fund through Airbnb rentals, you may effectively be running a business (you tax dodger, you). In addition to collecting bulk data from specific digital facilitators, HMRC intends to hit up advertising platforms and app stores, in case your vegan blog or freemium puzzler is taking off to any degree.

To be clear, it'll still be perfectly safe to offload your old Xbox 360 games on Gumtree under the proposed changes to legislation. Flogging screen-printed T-shirts on Facebook without the taxman sniffing around, however, might prove more problematic. Depending of how easy these new data dumps would be to analyse, though, it's unlikely HMRC would care unless you're making serious bank through your online side-project. According to the authorities, this isn't just a money-grabbing exercise: HMRC claims that it could use third-party data to conveniently autofill your tax return for you, meaning all you need to do is confess. The taxman also states, of course, that "those who are tax compliant should see little or no impact."

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UK plots crackdown on digital tax dodgers