Ebay and other portals can be made to hand over customer account details and selling histories as part of new powers of investigation extended in 2014.
The Daily Telegraph reported that HMRC has sent 14,000 letters to online traders suspected of running a business and failing to declare this on their tax returns. It follows a similar campaign in 2012.
HMRC uses a series of criteria or 'badges of trade' when deciding whether or not a transaction is classed as 'trade'. These include: selling in the hope of making a profit; the number and regularity of transactions; the period of time between when an item was bought and then resold and whether or not the item seller received "pride of possession" before monetising an asset. Sellers who repair and restore items in the hope of making them more saleable could also be deemed as traders rather than hobbyists.
However small, any earnings above the individual tax-free personal allowance (currently £10,600) are taxable if the receipts are considered a business profit.