Analysis: HMRC sending out a strong signal over undeclared earnings

The tax take from the eBay traders might prove fairly insignificant, but HM Revenue and Customs (HMRC) is sending out a signal that it will look at any undeclared income from any activity.

However, the potential revenue gained from undeclared tradesmen could be substantial. Any business in which payments are made in cash will be vulnerable to checks by HMRC.

The latest campaign is adopting the same carrot-and-stick approach as the previous ones. Declare immediately any unpaid income to HMRC and you will be treated far more leniently. Fail to declare and you could be investigated with potentially severe penalties. It is unlikely that eBay traders will be the last group to be targeted by HMRC.

• Neil Whyte is a tax partner with accountants and business advisers PKF