Aug 28

HM Revenue & Customs Spying On Avatars?

Category: Taxes by Stone Culdesac

In an article on PC Advisor, it is being reported that HM Revenue & Customs, the IRS for the UK, is spying on avatars who are possible tax evaders. They are even watching trading of items, saying that even if no Lindens are involved, you could still be taxed on the gain, or profit.

This follows earlier news that online gamers and community dwellers are on the taxman’s hit list. And it’s not just real-money profits being spied on. The Revenue said it will target even virtual profits: “Even if there is no cash transaction you could still be taxed on the profit or gain. The virtual aspect is a red herring. If someone is running a business, then they are required to register with us and pay tax on that business.”

Tax inspectors are using Xenon, a new high-tech snooper computer system, to scan the site, which has 35,000 regular users in the UK. Xenon is also being used to identify people making money from eBay and other auction sites. Source: Second Life players spied on by government

They mention that some start earning Lindens as fun and don’t realize they have to pay taxes on them, but the avatars they are looking at, are the ones who are running businesses, reminding them that they still have to pay taxes on their virtual profit. They had given avatars amnesty, saying that if you declare your profits now you would avoid paying up to 100% penalties on top of the monies owed, but the amnesty ran out on June 22.

I’m sure this isn’t the last we will hear about this.

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