An online seller has been ordered to pay £28,408 to HMRC after a tribunal ruled that he had deliberately filed inaccurate tax returns from selling Apple products and cassettes on eBay
The appellant, Vitalie Milasenco, appealed at the First Tier Tribunal (FTT) against an HMRC closure notice and discovery assessments for the tax years 2013-14 to 2016-17, which totalled £19,067.
He also disputed inaccuracy penalties and a failure to notify penalty of £9,341, which HMRC issued on the basis that he had ‘deliberately delivered’ inaccurate self assessment returns and failed to notify he was liable for income tax.
According to Milasenco, he had no income from online trading during the relevant tax years and he claimed he was being harassed by HMRC.
He had an eBay account and a PayPal account which had supposedly been hacked, resulting in a number of unauthorised transactions.
Milasenco was registered for self assessment from 2013-14 and was required to file tax returns. His returns for 2013-14 to 2015-16 declared income from employment as a security officer, which totalled £13,731.
He declared no income from self employment, causing HMRC to open an enquiry into his returns for the 2014-15 tax year on 6 January 2017.
Milasenco has acted as a trader on eBay since 2008 under the seller name geminis73. In 2016, he had items for sale on eBay ranging from electronic recording tapes to smartphones.
His Barclays Bank account had many transactions with mobile phone suppliers. There were also a number of payments to delivery companies such as the Post Office and Parcel Monkey.
In 2014-15, there were multiple deposits from Amazon totalling £7,814 into Milasenco’s Barclays account. He had also created a new online store on eBay under the name gemini-73-UK, where he sold Apple iPods and cassette tapes. There were also hundreds of ratings for the store.
Milasenco operated transactions through a PayPal account, with a transaction listing for the period 1 June 2014 to 26 August 2014 showing numerous payments received from different individuals with associated administrative fees indicative of trading.
His bank account for 2014-15 showed deposits of £125,234 via PayPal and amounts transferred to others via PayPal of £48,164.
In order to estimate Milasenco’s profits from self employment, HMRC used figures from a previous enquiry made in 2009-10 to 2012-13. This gave a net profit from trading of £20,346 per year. It later issued the relevant assessments.
HMRC issued a further closure notice on 3 December 2018 charging additional tax and national insurance of £5,184. On the same date, they issued discovery assessments for tax years 2013-14, 2015-16 and 2016-17.
At the tribunal, Milasenco argued that the transactions were unauthorised and that his eBay and PayPal accounts had been hacked many times. Further, many of the PayPal transactions were personal and not trading. He did, however, provide no explanations for the transactions on his Barclays account.
Judge Jonathan Cannan said: ‘The explanations given by Mr Milasenco are not credible given the volume of transactions, the period over which they are recorded and the transfers involving his Barclays account. Overall, I am satisfied that Mr Milasenco was trading in goods online in each of the tax years from 2013-14 to 2016-17.