HMRC to target online traders suspected of tax evasion

Online accountants should be aware that HMRC will soon start targeting e-marketplaces as part of its bid to stamp out tax evasion.

The news came after the Revenue won a case against an online trader who had been attempting to evade VAT.

Londoner, Gregory Allnutt, received a 20-month jail sentence after he was found guilty of evading VAT worth more than £420,000 on goods he sold over the Internet.

Allnutt set up different online companies, obtaining zero-rated goods from EU suppliers through one and then selling them through another. Despite having a VAT registration number, he failed to declare the tax to the Revenue.

Over the course of three years, Allnutt sold millions of pounds worth of electrical goods over eBay. He could afford to undercut his competition because his prices did not include VAT. In 2007, his accountant warned him that he was liable for VAT, but despite this he continued filing nil returns until 2010.

Chris Martin, the assistant director of criminal investigations at HMRC, said Allnutt believed he could evade his tax responsibilities by trading online. This case sends out a clear message to similar traders that they will be identified and action taken against them.

Furthermore, the Revenue have already started obtaining data about people who may be evading taxes through online activities and early next year it will start targeting e-marketplaces.

Allnutt evaded VAT totalling £429,337 and in court he pleaded guilty to all the 12 tax evasion charges levelled against him.

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