Unregistered online sellers: HMRC can go back 20 years

Resellers who never registered cannot rely on the four-year limit. HMRC's disclosure guide says they owe for up to 20 years, and going first costs less.

An eBay or Vinted reseller who has traded for years without registering for Self Assessment cannot rely on the four-year limit people often quote. HMRC's own guide to making a disclosure says that if you did not register by the deadline, you will have to pay what you owe for up to 20 years. The four years apply to people who registered on time and still got something wrong despite taking care.

That matters more now than it did. Since the rules started on 1 January 2024, platforms have reported sellers' sales to HMRC each January, the first reports arriving by 31 January 2025.

Who this is about

Selling your own unwanted things is not trading, and most wardrobe clear-outs owe nothing. This is about buying to sell, or making to sell: trainers bought in bulk and resold, charity-shop finds listed on Vinted, handmade stock on eBay. HMRC's guidance says you are probably trading if you sell goods you bought intending to sell for a profit. Once your gross takings from trading pass £1,000 in a tax year, you are expected to register by 5 October after that year ends.

How far back

HMRC's guide to making a disclosure sets the number of years by what happened:

registered on time and took reasonable care: up to 4 years;
registered on time but careless: up to 6 years;
did not register by the deadline, or deliberately underpaid: up to 20 years.

For most resellers that simply means going back to the first year they owed tax. Someone who started flipping trainers in 2021 goes back to 2021.

How a disclosure works

HMRC's online disclosure service runs in two steps. You notify HMRC that you intend to make a disclosure and receive a reference. You then have 90 days from HMRC's acknowledgement to send the disclosure, with the tax, interest and penalty worked out for each year, and to pay it or have a payment arrangement agreed by that date. The service covers tax years up to 2024 to 2025. The year that ended on 5 April 2026 goes on an ordinary tax return.

Someone who knew they owed tax and chose not to say uses a different route, the contractual disclosure facility, which HMRC describes as the only way to disclose deliberate behaviour with an assurance of no criminal investigation.

What it costs, worked through

Illustration, not a real person. Tom works full time in Leyton on a £35,000 salary and has resold trainers on eBay and Vinted since April 2021. His profit after stock, fees and postage has been about £6,000 a year, and he never registered.

His salary uses his Personal Allowance, so each year's profit is taxed at 20 per cent: £1,200 a year.
The profit stayed below the level at which self-employed National Insurance starts, so there is none to add.
The four tax years from 2021 to 2022 through 2024 to 2025 come to £4,800 of tax.

Interest runs on each year from the date its tax was due, at 7.75 per cent a year at the time of writing. Then there is the penalty. HMRC's factsheet on penalties for failure to notify sets the range for a failure that was not deliberate and is disclosed before HMRC asks: 0 to 30 per cent of the tax for a year disclosed within 12 months of the tax falling due, and 10 to 30 per cent after that. Where someone has taken three years or more to come forward, HMRC usually caps the reduction it gives for co-operating, so the oldest years sit higher in the range. On the three older years alone, the range runs from £360 to £1,080, and where that cap applies the bottom rises to 20 per cent, £720.

If HMRC writes first, the disclosure becomes prompted and the minimums rise: 10 per cent within 12 months, 20 per cent after.

What to do before HMRC writes

Work out when the trading started, not when the clear-out started.
Download every year's sales history and payout statements from each platform while you can still reach them.
Separate personal items sold from stock, and gather what you paid for the stock.
Work out each year's profit, not just its takings. Costs count in every year.
Register for Self Assessment for the current year at the same time, so the problem stops growing.

Our page for eBay sellers explains how we reconcile what a platform has already sent HMRC and handle a voluntary disclosure. The sales data reaches HMRC every January either way. What is still in your hands is whether you tell them first.

About the author

Harvey Dhillon is Founder and CEO of Zmartly, an accountancy firm for ecommerce sellers. He grew up in West London and began his career in finance at Barclays, in investment banking and wealth management, before going full-time on Zmartly in 2020.

Featured photo by Bryan on Pexels.