A CHARTERED accountant from Alton has warned businesses hoping to benefit from a new ‘sharing economy’ tax break may face hefty fines for late tax returns after delivery of the scheme was delayed.

In March 2016, the Government announced a new sharing economy tax break to let people earn £2,000 tax free from sites like AirBnB and eBay. However, according to Wendy Croucher, a director at Wettone Matthews Accountants, many will not have realised it is only effective from 2017.

This means taxpayers who profited from such activities last year will get no tax break, and will be expected to pay tax on all of their earnings.

People not already declaring income through self-assessments face potentially hefty fines of up to 100 per cent of the tax owed if they have failed to tell HMRC that they owe tax for the 2015/16 year by the deadline for disclosure, which fell on October 5, 2016.

In addition, if they don’t file a tax return by January 31, they will also face a fine of at least £100.

Ms Croucher said: “The recent boom in people making money through such sites, coupled with confusion over the new tax break would lead to the number of people being charged £100 or more for filing late tax returns.

“People unsure how much tax they owe or how to pay, are advised to call HMRC’s helpline which, as reported earlier this year, can be a frustrating experience due to lengthy waits.

“From April 2017, there will be two new tax-free £1,000 allowances for the sharing economy – one for selling goods or providing services, and one income from property. The first £1,000 of income from property, such as renting a driveway or loft storage, will be tax free. But despite the explosion of people making money this way last year, the allowance does not come into effect until 2017, meaning tens of thousands of people who have already profited from the sharing economy may not realise they are still expected to pay tax on all of their profits, provided they already earn enough to pay tax.

“Taxpayers can’t use the fact they were unsure about their income or how much they owed as a reasonable excuse not to have filed a return.”