In Vitalie Milasenco  v HMRC [2023] TC 08862, the First Tier Tribunal (FTT) confirmed HMRC's actions as reasonable on Income Tax assessments and penalties for the deliberate failure to declare income by a long-time online seller who persistently failed to declare his income.

  • The taxpayer was originally assessed to Income Tax for 2009-10 to 2012-13 as a result of an enquiry into online trading on eBay that concluded in January 2015. He did not appeal those decisions.
  • He was registered for Self Assessment from 2013-14. 
  • His returns for 2013-14 to 2015-16 only declared employment income and no income from self-employment. 
  • For 2016-17, he advised HMRC that he had no income from self-employment and was not required to submit a Self Assessment return. 
  • HMRC launched an enquiry into his affairs, found he was selling online with lots of evidence of self-employment income and issued a Closure notice and Discovery assessments for 2013-14 to 2016-17 for £19,067 in tax. 
  • HMRC also assessed Penalties for inaccuracy for 2013-14 to 2015-16 and a Failure to notify penalty for 2016-17 of £9,341 on the basis the taxpayer Deliberately delivered inaccurate returns and deliberately failed to notify his liability to Income Tax. 

The FTT found that: 

  • The taxpayer had traded on eBay since at least 2008. 
  • The feedback for transactions on eBay, coupled with transactions via PayPal and his Barclays bank account were numerous: all indicative that he was trading. 

The appeal was dismissed and the FTT concluded that he had self-employment income for 2013-14 to 2016-17. The closure notice, discovery assessments and penalties which had been assessed by HMRC were valid and should not be amended. 


Aside from the quite unusual fact pattern of a taxpayer's persistent refusal to declare eBay income from Self Employment, the FTT noted that HMRC's officer was extremely generous in basing all the later assessments on the figures gathered during the earlier enquiries and then allowing a massive penalty reduction (60%). Other taxpayers are not normally so lucky.

Useful guides on this topic 

Register for Self Assessment  
How to register for Self Assessment. 

Online Sellers & Tax
What are the tax implications of being an online seller? When does a hobby become a business? What expenses can online sellers claim for tax purposes? Are there special rules for taxing income? What are the VAT rules for online sellers?

Appeal: How to appeal a HMRC decision?  
Disagree with an HMRC decision? How to appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?

Discovery Assessments 
Why can HMRC issue a discovery assessment? What are the discovery assessment time limits? 

Penalties: Errors in Returns and Documents: At a glance 
What is the position when a return has an inaccuracy? 

Closure notices 
When does HMRC issue a closure notice? Can a taxpayer demand one? Are there appeal rights?  

Penalties: Failure to Notify 
What tax penalties apply if you fail to notify HMRC that you are chargeable to tax? Can they be appealed or reduced? 

Penalties: Deliberate Behaviour 
What penalties apply to deliberate behaviour? What is deliberate behaviour? 

External links 

Vitalie Milasenco v HMRC [2023] TC 08862  

Oak ad
Are you enjoying our content? 

Thousands of accountants and advisers and their clients use as their primary TAX resource.

Register with us now to receive our receive our FREE SME Topical Tax Update & newletter.