HM Revenue & Customs:Selling items online, through classified advertisements - Examples is worth a quick read.
Things aren't always black and white in the tax field, however if you're making any kind of intentional commercial income, it should be declared.
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The pirated software thing is always a taboo area. However it is rumoured that a certain large CAD package got it's position by releasing cracks themself, and I've never heard of them prosecuting an individual for using them. It's quite ingenious when you think about. Get joe public using your very expensive software, who then go to their employers saying what a fantastic bit of software it is, who then spend lots of money on it. Mean while, all your competition who are doing everything they can to protect thier software and are relying on legacy sales/hard sell with limited hands on experience, are losing market share.
Off course they've never publically admitted doing it, but when the cracks have came from the same source for a considerable number of years, it does make you wonder.