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Her Majesty’s Revenue & Customs have announced a new hit list of potential tax cheats who they are targeting for investigation.

High on that list are teachers who make extra cash from giving private lessons, people selling goods on eBay, Amazon or other internet sites, personal trainers and tradesmen and businesses who hide their true turnover so as to avoid VAT.

Thousands of teachers make extra money tutoring children and it is a simple fact that very few of them declare this income on their tax returns. I know this from personal experience as when I lived in the UK my wife, who taught music privately, was continually being undercut by school teachers “earning a bit on the side”. Not happy with their regular salaries, long holidays and gilt-edged pensions, these people – far from being overworked and too tired at the end of a school day – were earning substantial sums of money teaching at cut rates. Well, they only worked for cash, didn’t give receipts, and didn’t pay any tax or national insurance. When asked out this one of them even had the audacity to laugh and say “only mugs pay tax”. Yes, I reported him to the Inland Revenue (as it was then) without any hesitation.

As a resident of the Isle of Man it does make me cross when politicians and the press attack this island and others like it for costing them money in lost tax by harbouring tax avoiders. Well guess what, tax avoidance is legal but tax evasion – such as in the case of the music teacher above – is illegal. And guess what else – UK based tax evasion costs HMRC much more money than all those so-called “offshore tax avoiders” ever do.

So I welcome this new crackdown by HMRC. It isn’t confined to teachers. Millions of pounds of goods are bought and sold on sites such as eBay and Amazon every day. Many of the sellers are genuinely disposing of items such as books, CDs, china, clothing, furniture or almost anything else imaginable which they bought for their own use but no longer need or have space for.

HMRC are not worried about these people; but they intend to target sellers who are selling lots of items or many units of a particular item. So if you are selling one copy of a CD by some one-hit wonder pop group you are OK but if you are selling dozens of copies of it you are going to be in trouble as you are clearly trading in goods not just disposing of something personal that you no longer want.

How will they find you? Well long gone are the days when local tax offices sent staff to newsagents to note anyone offering cleaning, teaching or similar services. In the 21st Century HMRC now have web robot software which will crawl the web and identify people who are actively trading on a regular basis.

The software will also be used to uncover inconsistencies between the amounts that companies or individuals are paying in tax and their bank interest, property income (can you believe that there are some landlords who don’t declare their rental income properly, if at all? Bit daft too as they then can’t claim tax allowances) or lifestyle. If you live in a house worth £500,000 but declare a tax income of £20,000 don’t be surprised if HMRC ask you to prove how you can afford the house.

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One Response to “Tax Crackdown on Teachers and eBay Traders”

  1. Martyn says:

    Interesting to see this targeting of ebay sellers and probably long overdue.

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