Internet trade and e-commerce including Amazon and eBay is a relatively new area and business owners may find the rules surrounding tax and accounting obligations to be somewhat confusing. It is, however, crucial to get up to speed on what is required in order to avoid hefty penalties from HMRC. Luckily, The Accountancy Solutions are well versed in the relevant rules and regulations and can offer top-notch accounting and tax advice to Amazon and eBay traders.
Tax disclosure facilities
UK Internet traders are required to properly register themselves as business traders. As a result, they need to account for VAT as a business if their taxable turnover is above the VAT threshold of £85,000 per year. People selling personal items on an ad hoc basis won’t usually be liable for income tax but if you are selling items on a repetitive, systematic basis whilst seeking profit, this is classed as trading and taxes are payable.
A few years ago, HMRC began to clamp down on Internet traders who hadn’t paid all the taxes they were liable for. For a period of time, these traders were offered a chance to come forward and pay what they owed under the ‘e-markets disclosure facility’ campaign. Those who owned up rather than being caught had the chance to pay lower penalties and sometimes even no penalties at all.
Today, small-scale Internet traders are being hit with much tougher penalties by HMRC if they don’t declare their income and pay the appropriate taxes. Traders who are assumed to be deliberately concealing income are being charged large sums under the ‘deliberate defaulters’ scheme. These defaulters who are selling goods online are being charged penalties of up to 59% of the tax owed, in addition to payment of the original amount of tax. This is in comparison to an average penalty of 35-50%.
In March 2017, HMRC opened up a new ‘card transaction programme’ disclosure facility which again, offers lower penalties to businesses willing to come forward and declare their underpayment. HMRC is now collecting data about users of online marketplaces in order to identify and ultimately stop tax avoidance. This will make it very difficult for defaulters to hide. The problem is that some traders are unaware that they owe tax. Essentially, however, the rule is that when you are selling goods for profit, HMRC must be notified.
If you are unsure of your status and obligations, The Accountancy Solutions can help. We will assist you in identifying what you need to declare in order to avoid the possibility of a hefty fine or investigation onto your business.
Company Financial Accounts
A great way to start ensuring that you are prepared for any dealings with HMRC is to get your financial accounts in order. The Accountancy Solutions is experienced in helping businesses large and small to develop and maintain stringent and accurate financial accounts that fully comply with legislation. Maintaining financial accounts can be overwhelming but our accountants can help you by:
- Reporting on financial statements to identify the position and performance of your company.
- Maintaining financial records and accounts to enable you to stay on top of your finances and readily access all the information you might need.
- Preparing your financial accounts accurately, ready for HMRC to calculate your tax bill.
Ensure you have all the information you need, collated, to enable you to make good management decisions about your business and take it forward successfully. The Accountancy Solutions can assist you by:
- Creating monthly management accounts to track your company’s performance. We help further by ensuring that these reports are in an easy to read and understand format.
- Providing a variance analysis to show any discrepancy between your planned budget and actual income.
- Researching industry reports to check your company’s performance against that of other businesses in the industry.
- Giving your company a financial health check and cash flow analysis. This helps you to ensure that your company’s finances are in good health and that your income is sustainable. If there are any problems, it gives you space to intervene before the problem becomes critical.
Self Assessment Tax Returns
If you are required to complete a self-assessment tax return form, allow us to lend you a helping hand. There is a huge amount of pressure to complete your form on time and many people complete their forms incorrectly due to the complexity and time pressures. Our team of qualified accountants can take some of that pressure away and ensure that you don’t face any repercussions. We can help to summarise your income from all areas and present the data to HMRC in an accurate format. We also check for any allowances that you can claim which has the potential for significant savings. Nobody wants to pay taxes where they are not owed.
Requirements for corporation tax returns are also hugely complicated and ever more time to consume. We can help you to provide your full annual account and tax return to HMRC including all the important details and ensure it arrives before the deadline. We can also help you to calculate as accurately as possible what tax you will owe to enable you to make provision and save for the final tax payment throughout the year. We will always check if you are eligible for tax relief or tax allowances.
If you need to be VAT registered but don’t know how to go about it, we can help. Calculating VAT can be a long and daunting process but we can simplify it for you. We have many years combined experience in keeping meticulous VAT records for penalty-free HMRC submissions.
As an Internet trader, you need to be aware of Intrastat returns. This is a system for collecting data on trade between EU member countries. Every VAT registered company trading goods with other EU member states must declare certain information. The amount of information required depends on the value of your imports and exports. There is a threshold of £1.5m in imports and £250k in exports and below this threshold, you are only required to declare on your standard HMRC VAT form. Sound like a foreign language? The Accountancy Solutions can help.
Call us today on 01216297768 or 02070784001 to discuss your business needs and free and no obligation advice.