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Robots seek online tax evaders

The next battle against tax evasion is to be waged online, with HM Revenue and Customs (HMRC) planning to raise money from the booming virtual economy.

George Bull of accountancy firm Baker Tilly explained: 'Instead of having tax inspectors roaming street markets looking for people who have set up businesses without declaring them, HMRC will use robots to sift through masses of data online.

'People who clear their attic by selling a few things on eBay should not be affected but those who run a business online are likely to be identified by two factors. First, the things they sell are likely to share a common ground – unlike a random collection of things that have built up in the attic over the years – and, second, they are likely to have been bought with the intention of making a profit.

'These robots are a fabulous threat and the potential numbers likely to be caught internet trading could be massive. I would expect HMRC to offer an amnesty, similar to earlier deals offered to plumbers and dentists to keep costs down.

So even if you've only been buying and selling stuff on ebay, you're liable to pay tax if you've done it with the intention of making profit.

Mike Warburton of Grant Thornton said: 'The same principles will apply online as if you had set up a market stall. Did you buy what you are now selling with the intention of making a profit? If the answer is yes, then tax is likely to be due in exactly the same way as if the business were conducted offline rather than online.

'Some people imagine there is less chance of them being detected trading online but electronic surveillance – for that is what this is – will make it much easier for HMRC to detect and prosecute evasion. Some years ago, Miss Whiplash – I forget her real name – argued that for her to pay tax could mean the Chancellor would be living off immoral earnings.

'The court rejected her argument and ruled that income from all trades, whether they are immoral or even illegal, are subject to tax. This new campaign means many people currently making money from a wide range of services marketed online will find they have to pay tax.'

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