In Neil Edgell v HMRC  TC 6853 HMRC was successful in catching an eBay trader, assessing him for VAT back to 2008. Assessments were found to be both within time and made best of its judgement despite the difficulties for both parties in extracting information from the online platform.
- From 2008, the trader sold counterfeit parts for BMW cars, mostly on eBay. In 2011, he was investigated by trading standards and prosecuted in 2014.
- Trading standards officers destroyed the notebooks in which he kept his records.
- In 2014, HMRC became aware of the prosecution. In 2016, it decided that he should have registered for VAT in 2008 and assessed to him the VAT he should have charged, plus a penalty. HMRC assessed him on the basis of £427,000 turnover from 2008, per trading standards’ figures. The VAT was £45,287 plus a penalty of £6,114.
- The trader accepted liability but disputed the amount.
The tribunal found that:
Both HMRC and the trader had difficulty getting figures from eBay.
An assessment by HMRC in a case of VAT fraud must meet three conditions:
- it is made within 20 years of the turnover
- it is made within one year of HMRC having sufficient facts
- it is made to the officer’s best judgment.
The first condition was clearly met. For the second, there was debate as to when the one year started. HMRC had given the trader every opportunity to challenge the figures. The one year started when satisfied that the trader was not able to provide alternative figures.
For the third condition, the tribunal found that HMRC had used best judgement in using trading standards figures, except for one detail. The trader had sold some personal items such as sofas, CDs and DVDs on eBay which should be excluded. In the absence of evidence, the tribunal valued them at £10,000 and reduced the turnover figure to £417,000, requiring the VAT and penalty to be recalculated.