Marketplaces such as eBay, Etsy and Vinted now report seller data to HMRC under UK platform reporting rules. A letter means HMRC wants to check whether your sales count as trading. Work out if you exceeded the trading allowance, then disclose any underpaid tax voluntarily.
Pull your full sales history from each marketplace platform used.
If the reply date on your letter is within 14 days, call 020 3441 1258 rather than waiting, or check the reply to an enquiry you have already sent.
Marketplaces are now required to report seller activity to HMRC once certain sales or transaction thresholds are reached. A letter usually follows a mismatch between reported platform data and your Self Assessment record, or the absence of one.
Receiving a letter does not automatically mean you owe tax. Selling unwanted personal items occasionally is usually not trading, but regular buying to resell, or making goods for profit, generally is.
The Platform Operators (Due Diligence and Reporting Requirements) Regulations 2023 require digital platforms, including eBay, Etsy and Vinted, to collect seller information and report it to HMRC where activity crosses set thresholds. This data now flows to HMRC automatically each year.
Whether tax is due depends on whether your activity is trading under general principles developed through case law and reflected in HMRC guidance, and whether income exceeds the trading allowance. Where it does, profits are taxed under the Income Tax (Trading and Other Income) Act 2005.
If tax has been underpaid, standard Taxes Management Act 1970 time limits and Schedule 24 Finance Act 2007 penalties apply, with lower penalties for unprompted disclosure made before HMRC's contact.
If your online selling is a personal side activity separate from your company, it is taxed on you individually, not through the company. Keep marketplace income entirely separate from company records.
If you are selling company stock through a personal marketplace account by mistake, that income belongs in company accounts, not on your personal return, and needs correcting at company level.
If your activity is genuinely trading and profits exceed the trading allowance, you will owe income tax, and possibly National Insurance, plus interest from when the tax was originally due.
Getting the trading test wrong in either direction is common, so professional review is often worthwhile before you respond to HMRC. If a letter develops into a formal check, tax investigation insurance included with our Growth plans covers representation costs — see /fees.
Do not assume a letter means you definitely owe tax. Many recipients are occasional sellers well within the trading allowance and simply need to confirm that in reply.
Avoid ignoring the letter while you decide what to do. A timely, considered reply keeps you in a stronger position than silence.
Do not mix platform reporting data with your own records without checking dates and totals carefully, since reporting periods can differ from the tax year.
*Included on the Growth plan — see our fees.
HMRC sent me a letter about eBay, Etsy or Vinted income, what now? is handled by the same team at Accotax London Limited, 12 London Road, Morden, London SM4 5BQ. We deal with HMRC compliance checks for limited company directors across Morden, Wimbledon, Mitcham, Sutton, Croydon, Kingston and central London, and by video call for companies anywhere in the UK.
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