Why HMRC "refuses to discuss" eBay, web-robots and your personal information
HMRC is claiming to be able to find tax-evading taxpayers by monitoring eBay? But how are they able to do this? When we asked HMRC, they refused to discuss how they might be getting the information they'd need to link a (usually) anonymous username to a taxpayer. Interested? We were.
Yesterday, HMRC issued a press release talking about their ‘areas of interest’ for 2011. In a similar vein to the previous Plumbers’ and Doctors/Dentists ‘amnesties’ (HMRC prefer to call them ‘opportunities’ rather than amnesties as you still have to pay any unpaid tax), the newest targets on the list are teachers, who do outside tutoring or exam marking, and eBay sellers.
An HMRC spokesman said that they are not interested in the data on every eBay user. The example they gave is that Mr Smith who disposes of 2 china pieces a month is probably clearing out the loft, but Mr Smith who sells 50 china mugs a day is probably trading. And they do have a point, someone selling that kind of volume would most likely be considered trading and should pay income tax on the profits same as for any other business.
HMRC have actually had the ‘spying’ Xenon software for about 4 years, the new development is that they can now, apparently, link the Xenon software to their Connect Self assessment data to find matches, or rather, omissions. But regardless of whether you think HMRC ought to be using this type of software to sniff out tax evaders, there's a more important question.
How are HMRC matching eBay usernames to Self Assessment records?
HMRC state categorically that they are not obtaining any personal details from eBay directly. My own eBay username does contain my (fairly unusual) surname, but most do not, and none I have seen include the ten digit unique taxpayer reference (UTR) used in the Self Assessment system.
We asked HMRC how they would know which taxpayer (or non-taxpayer) RatBoy or SillySnuffles or Sexy229 was if they weren’t getting these details from eBay? At best HMRC could access a username and postcode from the user’s profile as part of their eBay web-bot trawl, which is still not enough to identify an individual taxpayer.
So we asked a HMRC spokesperson.
HMRC "refuses to discuss" their data collection methods. We asked whether this might appear as though they are merely bluffing and the web-robots can't link eBay data to Self Assessment. We were told HMRC does not do bluffing. So we asked whether the fact that they are able to link eBay accounts to taxpayers suggested that they were somehow obtaining eBay users personal details, possibly in breach of Data Protection regulations. HMRC said this was "ridiculous" and that to suggest that a Government organisation would have such a Data Protection issue would make HMRC "animated and annoyed".
In fact, Bitterwallet was told HMRC would be so "extraordinarily annoyed" that they would get "lawyers involved". Good job we didn't ask a non-ridiculous question then.
We asked the HMRC spokesperson to put this in writing. This is what we got:
As we discussed we cant go into detail about our intelligence gathering, HMRC always abides by the law.
The vast majority of people who trade on line have nothing to worry about, we are only interested in people carrying out a trade, some one with the intention of making a profit.
I will send you more detail.
So aside from refusing to even discuss our concerns, most people who trade online apparently have nothing to worry about. Funny, call me a Chartered Tax Adviser, but I thought that was the entire point of the new 'area of interest', i.e. to catch those who are trading online.
Good job this chap knows everything about HMRC's data collection practices as he clearly isn't up to speed on their latest campaign.