HMRC is coming down hard on small online retailers, new figures show

Mark Sands
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Small online firms can face heftier penalties than their larger peers. (Source: Getty)

The taxman is coming down hard on the world of online retailers, new figures show, with firms facing tough penalties for unpaid taxes.

New figures show that small online shops and eBay-style traders can face heavier fines than their larger peers.

Online retailers face an average penalty of 59 per cent of tax owed, on top of their unpaid bills, compared with between 35 and 50 per cent fines for other firms, accountancy Moore Stephens said.

One Bradford-based online car accessory trader was slapped with a penalty of 70 per cent of tax owed, while an internet trader in antiques was hit with equivalent to 66 per cent of their existing bills.

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Moore Stephens partner Dominic Arnold said the fines highlight the risks to small retailers using sites like eBay, Amazon and Alibaba, believing they will not be picked up by the taxman.

“HMRC has given due warning to online traders that they are in their sights,” Arnold said.

“However, many sellers might not consider the fact they should be paying tax and are not even registered with HMRC.”

From this month, online retailers have been allowed to earn up to £1,000 annually without being taxed, but Moore Stephens warned many firms rapidly outgrow that exemption.

In March, the taxman opened a new "card transaction programme" disclosure facility designed to offer lower penalties to firms volunteering information on potential under-payment.

However, Moore Stephens also warned that because HMRC takes data from companies who process debit and credit card transactions, it remains easy for the tax man to track down even small firms failing to pay the right amount of tax.

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