Tax discussion -was -At the risk of being flamed !!

arushofblood · 1 February 2007 at 12:20PM

I've been Ebaying for a few years now, doing progressively well. I've only just realised quite so well after keeping a spreadsheet of costs/profits etc. ( I hate paperwork so I didn't bother in the past ). I realise now that I've reached a point that I ought to be declaring my earnings to the taxman, something that I am now looking into and actioning, putting aside what is owed.

Just had a call from Ebay ( I hope anyway ) asking me to confirm my identity and asking me if I were tax registered and did I understand the new proceedures on Ebay. I said ( I hope not foolishly ) that I wasn't yet registered.

Were they checking up on me to report me to the Taxman ? Can they do that ? Anyone else had a call ? ( Doesn't help that an old ex of mine who ran off with £750 of my money told me to 'fck off and die' and threatened to inform the taxman if I ever dared ask for my money back again !! Yes, I dared to ask him ! )

soolin · 1 February 2007 at 12:26PM

Ebay are obliged to provide details to the tax man, if asked. They do not routinely send them details though which is why so many people get away without being caught for so long.

All income earned from ebay through selling items that are not your own personal things, are subject to UK tax and NI where appropriate. There is no magic limit under which the tax man will not care.

If you register with the tax man you will be asked your start date, and if that is more than a few months ago (sorry can't remember the time frame) you may already be subject to a penalty for not having notified them in time. Also remember that the time limit for submitting tax returns for the year to 5 April 2006 was yesterday, so that might be a slight problem as well.

My own personal experience was that the revenue were actually quite pleasant to deal with, I phoned them on a special number to register as self employed (I'm sure the number will be provided any minute now by someone) and they explained what to do.

The only other thing I would say is once you do accounts you may well be shocked how little profit there actually is after all the stationery, postage costs, fees and other expenses are taken into account.

Soo

soolin · 1 February 2007 at 12:28PM

Incidentally, if it was ebay that called you then it should have been about VAT registration, not tax registration as they are not involved in the collection or reporting of tax. They have however recently changed the terms and conditions relating to VAT registered members, but that doesn't kick in until your turnover is high...again I don't have the figures to hand but I think it is about 60k turnover a year.

Soo

arushofblood · 1 February 2007 at 12:33PM

Thanks Soolin for your reply.

Would my 'start date' be the date that I registered with Ebay or the time that I moved up a notch and started earning a significant amount ? Actually, re-reading your response are you saying that I needed to have registered as self employed and taxable even in those early days of listing items few and far between ?

Is there a 'model' spreadsheet around for Ebayers ?

arushofblood · 1 February 2007 at 12:36PM

soolin wrote:

Incidentally, if it was ebay that called you then it should have been about VAT registration, not tax registration as they are not involved in the collection or reporting of tax. They have however recently changed the terms and conditions relating to VAT registered members, but that doesn't kick in until your turnover is high...again I don't have the figures to hand but I think it is about 60k turnover a year.

Soo

Now don't laugh at my ignorance here

VAT registration is different to tax registration then ? Wonder why they called me though ? Perhaps my turnover is 60k a year without me realising it !!

soolin · 1 February 2007 at 12:36PM

Technically as soon as you started selling goods for profit, as opposed to stuff you happened to find under your bed (I mean books and old Cds tsk tsk), you were trading. The Revenue do not have lower limits for declaration.

As for pro forma spreadsheets there are a few around and I'm sure some of the regular posters on here will supply you with details later. I was trained as an old fashioned accountant and...I'm embarrassed to admit it, I still do accounts by hand and type them up.

Soo

apprentice_tycoon · 1 February 2007 at 12:40PM

I had a call yesterday to ask if I was VAT registered, she said that it was just to make sure that if I was registered I needed to read the email that they had sent

soolin · 1 February 2007 at 12:40PM

arushofblood wrote:

Now don't laugh at my ignorance here VAT registration is different to tax registration then ? Wonder why they called me though ? Perhaps my turnover is 60k a year without me realising it !!

Yes there is a difference. The Revenue side of things require you to register as self employed and complete accounts as soon as you start trading, regardless of turnover. The VAT side of the department only require registration once your turnover (note, not profit but turnover) reaches the lower limit. By not registering with both that is technically two separate offences.

If you are unsure you might find a local accountant who can help, you can ask for details of fees before you agree to taking them on and of course their fees will be tax deductible. Most will already have all the computerised stuff they need to do basic accounts for you very quickly.

Soo

arushofblood · 1 February 2007 at 12:41PM

*gulp* So, me being honest now and declaring stuff after thinking that you only did this once you'd acheived a certain level of income could cause me a whole load of grief as I have no records of my early sales ??

arushofblood · 1 February 2007 at 12:46PM

soolin wrote:

Yes there is a difference. The Revenue side of things require you to register as self employed and complete accounts as soon as you start trading, regardless of turnover. The VAT side of the department only require registration once your turnover (note, not profit but turnover) reaches the lower limit. By not registering with both that is technically two separate offences.

"Daddy, can we visit Mummy in jail today?"

Do they take ignorance into account ? I really had no idea about all this. Certainly not the self employed registration and only thought I'd be taxable when profits reached a certain level ! Now I'm sh!tting myself about being upfront about my Ebaying !

soolin · 1 February 2007 at 12:54PM

I'm completely out of date re tax laws and penalties. There used to be rulings that broke down late or incorrect declarations into the following 'default, wilful default or negligence' so some leeway was available for those who make a genuine mistake.

It used to be though that unless you were a wilful defaulter, or Lester Piggot, you would never face more than a fine based on the proportion of tax unpaid.

It might be best to talk to an accountant, sometimes they can smooth teh path quite nicely.

Tax discussion -was -At the risk of being flamed !!

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