Tax crackdown on internet businesses

HM Revenue & Customs (HMRC) has proposed an extension of its powers to go after businesses that make money online through apps stores, listings sites or similar services and don’t declare the income.

According to the department, such businesses form part of the “hidden economy”, which the taxman estimates costs the Treasury around £5.9bn a year in lost revenue. If HMRC gets the powers it wants, firms such as Airbnb, Apple, Gumtree and Amazon could be required to hand over user information to the Government.

Although they don’t name any firms in the consultation, which closes on October 14, HMRC has outlined the areas it will target, which include advertising, app stores and booking and reservation services. As such, firms like Amazon would be required to hand over details of businesses operating on their platforms.

The sort of information the taxman will be interested in is likely to include the names and addresses of sellers, advertisers and app developers on such platforms, as well as the value of transactions made.

In a statement, the department explained that data provided by the platforms could be compared against data it already holds, allowing it to spot evaders. In this way, it believes that the Treasury could recoup some £860m by 2021.

The taxman already collects similar data from credit card companies and the proposals to gather information from online platforms could become law next year. In addition, HMRC is talking of launching a new “disclosure channel” to allow online businesses to submit details of untaxed revenue.

According to the Revenue, the consultation and proposed changes are focused on making it easier for businesses to report taxable income, while also narrowing the “hidden economy” tax gap.

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