Ebay do that because seller would ask a starting price of 0.01 cent/pence then ask £15.00 postage so if the items sold for £5.00 they only get commission on that sum. Now they total the sale price and shipping cost charged and their fees come off the total. As for informing the tax man, I'm registered in Belgium but sell on UK Ebay so the UK tax man can't really touch me, having said that Paypal does inform the authorities for any transactions over €3000.00 per month. One has to remember that about 95% of all that is sold on Ebay is done outside a sales tax regime, a sort of a car boot sale on line. That's fine for small amateur sellers but there are big operations out there buying and selling for gain and need to be treated just like any other trading company. Of course the downside of that is that everybody ends up paying. sound familiar ?