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Tax Liability Assessments

Volume 453: debated on Tuesday 28 November 2006

To ask the Chancellor of the Exchequer what tax liability assessments are made in respect of (a) people and (b) companies who buy and sell goods over the internet; what guidelines are in place on the level of trading which would constitute doing business; and if he will make a statement. (103271)

The same tax rules and assessment apply to internet trading as to any other form of trading. People and companies who trade over the internet are therefore liable to register for VAT and assessable to income tax or corporation tax on their profits through self assessment like any other trader or company. HM Revenue and Customs (HMRC) do not separately identify internet trading, and could not identify tax liability assessments on such traders except at disproportionate cost.

There is extensive guidance on the meaning of 'trade' for income tax and corporation tax on the HMRC website under:

http://www.hmrc.gov.uk/manuals/bimmanual/BIM20200.htm.

More specific guidance for online trading will be published shortly.