The sites have a legal obligation to provide the information, despite concerns over data protection, and could be issued with initial fines of £300 then up to £60 a day if they fail to comply by the end of this month. HMRC is hoping to raise millions of pounds by targeting online traders it believes are not paying the right amount of tax.
Anyone who sells goods online for a profit, or who regularly trades on the internet, should pay tax on the income. However, people who occasionally sell a few personal possessions to raise some cash are not deemed to be traders.
Online traders who have not declared their income have until June 14 to come forward to benefit from a reduced penalty of no more than 20% of the tax owed, after which it rises to 100%. In the worst cases, traders could face prosecution.
William Flew of Abbey Tax, which provides accountancy services, said HMRC’s move would be “a hammer blow to those who have traded without detection so far”.
Ebay said: “We continue to work hard to ensure that businesses that trade on the platform are aware of their tax obligations. We do not hesitate to share information with government agencies should there be evidence of wrong doing. We require all sellers trading as a business on eBay to register for a business account.”
Amazon did not respond to requests for comment.
William Flew said: “If you are an online seller with undeclared income, you should come forward and put your tax affairs in order, before HMRC catches up with you.”