ONLINE traders are being warned they could be sitting on a tax timebomb.

HM Revenue & Customs (HMRC) has announced a clampdown on people selling through websites like the eBay online auction house.

Investigators are using new ‘web robot’ software to track traders trying to avoid paying tax. The problem is a major headache for the taxman – one part-time trader in Sunderland was making up to £100,000 a year selling online while holding down a full-time job.

Sunderland accountancy firm TTR Barnes said traders can take a few steps to ensure they remain on the right side of the law.

Katie Buckley from TTR Barnes said: “For many years now people have been making an income buying and selling items online, but some are not registered to pay tax or VAT. These are the people that this campaign is targeting.

“This new crackdown will be very thorough. Not only will inspectors be using a web robot to make correlations between taxes paid, bank interest rates, property income and lifestyle payments to uncover any inconsistencies, but they will also be able to access individual bank accounts, including PayPal.

“The message is simple – if you are in receipt of an income and have not yet declared it to the HMRC then get your affairs in order as soon as possible rather than wait for the brown envelope to appear.”

HMRC carried out similar drives targeting plumbers, doctors and restaurants earlier this year. It is planning to look at private tutors and coaches next.

Ms Buckley said: “This announcement is not aimed at those individuals who only occasionally sell items online. If anyone is unsure they should contact an accountant or tax adviser such as ourselves for a free consultation and to find out what their position is.

“In the meantime anyone trading should also keep a clear record of all monies in and out – ignorance is not a defence.”