eBay side-hustlers deserve to get taxed

There will be people outraged by the latest initiative of HMRC: to demand that the likes of Airbnb, eBay, and Vinted furnish it with details of everything bought and sold on their online platforms. The taxman should keep his nose out of the sharing economy, many will say. People who sell their secondhand clothes, books, or who earn a little holiday money by letting their property to tourists while they are themselves away from home are doing the environment a favour, they will argue. HMRC should keep its nose out and go for the ‘real’ tax-dodgers in large corporations, who are taking advantage of our tax system by shunting profits to more favorable jurisdictions.

I am all for pursuing big tax-dodgers but sorry, HMRC should not be turning a blind eye to the sharing economy. So long as it observes a de minimis rule and passes its nose over the more petty end of online trading, online platforms should absolutely be expected to cooperate with tax collection. People who sell large amounts of ‘personal effects’ online without paying tax are getting a free ride and are constituting unfair competition for businesses operating legally by declaring their income. There are people shifting industrial quantities of goods over the internet but who seem to think that the online world shouldn’t be subject to normal irritating rules, like having to pay tax. It merely increases the tax burden on the rest of us.

The archetypal British tax-dodger in the public imagination is a self-employed tradesperson who demands payment in cash ‘so we can forget the VAT, know what I mean’. I am sure such people still exist, but they have been targeted by HMRC for decades now. Moreover, the growing reluctance of many people to pay for anything in cash is somewhat interfering with this traditional form of offending. The far bigger tax-dodgers now, I suspect, are employed people with side hustles – who are not in the habit of filling in tax returns and have no idea what to do when they have made some money on the side, say by renting out a garage or flogging a few antiques which they bought for a song. It won’t even occur to many of them that they ought to be paying tax.

Actually, tax rules are very reasonable on this kind of activity. There is a rent a room scheme, for example, which allows people to earn a certain amount tax-free by taking in a lodger. There is also a Trading Allowance that enables people to make up to £1000 a year from side hustles without being bothered by the taxman. Nor will most online sellers of second-hand clothes have to worry about paying tax because they won’t have made a gain – the M&S shirt you have worn a few times is unlikely to be worth more than you paid for it. But as for anyone who is making significant sums for selling or renting stuff online, no, you shouldn’t be allowed to operate under the fiscal radar on the grounds that you don’t consider you are running a ‘proper’ business. Those of us who have been paying tax on self-employment for many years are not going to weep for you if you are reported to the tax authorities by Vinted.