Original URL: http://www.theregister.co.uk/2006/05/27/ebay_vat_robot/

VATman activates eBay tax robot of doom

Search engine targets high-volume traders

By Lester Haines

Posted in Small Biz, 27th May 2006 08:02 GMT

Caveat vendor: the UK taxman has unleashed a £250,000 "web robot" to track down VAT-dodging high-volume eBay traders who have absent-mindedly forgotten to register for Value-Added cash extraction.

According to thisismoney.co.uk, the "robot" in question is an advanced search engine which pinpoints said rogue traders. HM Revenue & Customs (HMRC) estimates it will net £1m a year in extra VAT and "force an extra 20 businesses to register for the tax".

The figures add up thus: the National Audit Office (NAO) says VAT on ecommerce sales - which continue to rise inexorably - totalled in excess of £1bn during the 2005 to 2006 tax year. An estimated 70,000 people make a quarter of their income by trading on eBay.

Sadly, many do not declare these earnings, and while those dealing second-hand stuff need pay VAT only on profits, failure to do so or to keep proper records could result in being hit for VAT on the full sale price.

NAO supremo Sir John Bourn enthused: "I find it encouraging that HMRC is well positioned to manage the current risks to VAT from electronic commerce. With internet sales set to mushroom in the next few years, the department faces a challenge to ensure it stays ahead of the game. Some businesses are inventive at side-stepping VAT, and the department must be equally innovative in guaranteeing the exchequer gets the revenue it is due." ®