Got an HMRC letter about your online sales?

Short answer: Don't ignore it. HMRC sends these letters when platform data suggests you may have undeclared trading income. Work out whether your sales were trading or just your own things, then respond by the deadline in the letter, either declaring the income or explaining why you don't owe anything.

Why HMRC is writing to sellers

Platforms now send HMRC details of sellers with 30 or more sales or more than about £1,700 a year. HMRC compares that with tax records and writes to people who may have trading income they haven't declared. These are often called "nudge letters". Reported campaigns have given people 30 days to respond.

Step 1: read the letter carefully

Check which tax years it covers, what it asks you to do, and the deadline. Make sure it's genuine: HMRC won't ask you to pay through a link in a text message.

Step 2: work out whether you were trading

• Own used things only: generally not taxable. You can tell HMRC that, keeping any notes that show what you sold.
• Bought or made to sell: that's trading income. If it was over £1,000 in a tax year, it should have been reported.

Not sure? Do I pay tax on reselling? explains the difference.

Step 3: pull your numbers together

For each tax year in the letter: total resale sales, what that stock cost, fees, postage and packaging. Each platform's sales history and your bank statements help here.

Step 4: respond by the deadline

• If you owe tax, follow the letter's instructions to declare it. Owning up yourself usually means lower penalties than HMRC finding it first.
• If you don't owe anything, reply explaining why.
• If it's complicated or the amounts are large, get help from an accountant.

What happens if you ignore it?

HMRC can open a formal enquiry, estimate what you owe, and add interest and penalties. Replying, even just to say you're gathering information, is always better than silence.

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