Taxing the sharing economy
The sharing economy began to appear in the early 2000s as people looked for extra cash driven by the impact of the recession.
This new economy (worth an estimated £15n) has been on the radar of the tax office (HMRC) for a while. A consultation document issued by HMRC with the title “Tackling the hidden economy: Extension of data gathering powers” is a clear warning for 2016 onwards for everyone to ensure they declare income from places like AirBNB.
HMRC plan to collect data from third parties and estimates it will raise £285m by the end of 2021. Companies like Apple, PayPal, Amazon, AirBNB and Etsy are high on the target list.
The law supports HMRC. The Finance Act 2013 section 228 gave new powers to HMRC collect data from businesses that process credit and debit card transactions. These powers will now be broadened to data held by electronic payment providers (not necessarily in relation to credit and debit cards), and business intermediaries. Intermediaries are businesses/Websites that allow customers to place orders, buy or reserve goods, services and/or digital products.
According to the ACA, a leading professional body in the accounting world, HMRC are under extreme pressure to increase the tax take. They will turn up armed with data and look to penalise you if they think you are withholding information.
As we move to online reporting the tax net is drawing closer. If you’d like any help dealing with these matters get in touch and remember, our fees are usually tax allowable.