£4,500 through PayPal - will the tax man get me?

fatboyonadiet

Had an e-mail off PayPal (don't worry it is genuine) telling me over £4,500 has gone through my account, didn't realise it was that much but that's besides the point, I need to verify my address (they're sending me details in the post) but it's also asking me to put my business details in - I don't have any!

It seems that I can still use my account as normal I just can't close it, should I just leave it be or will they keep chasing me?

Should I open a new PayPal account? Obviously it's not all sheer profit a lot of it is old tat and I sell a lot of stuff for my wider family too, some is stuff I've bought for £10 and sold for £20. Will the tax man claim loads of tax off me now?

Help!

soolin

The tax man doesn't catch people through turnover or power seller status alone. Some people get caught and some don't, if you are at all worried then just declare your income as you ought to be doing. Anyway you will probably be surprised how little actual profit there is after you take into account all ebay/paypal fees and other costs.

Soo

fatboyonadiet

Cheers, some of the items are profit I will admit that but what is the view on used items? Can they tax you on the profit on these?

martindow

If you are selling private things that you no longer need, that will be considered as capital gains for which there is an annual allowance of several thousand pounds each year before which tax is payable so that would not be a problem.

If you are buying items specially to sell on then that would be considered a business and income tax would be payable on any profit. But, as Soolin says, by the time you have deducted all your expenses (like 40p a mile to and from the PO) your profit is is probably rather less than you might think!

HairyHatMan

You can either declare it now (and probably face a £100 fine for not telling them when you should have done), or not tell them and live for the next n years hoping they don't catch you.

mjk_2

At what point do you have to start declaring profits to the taxman? I sometimes buy stuff to sell, though so far I've probably made about £200 profit. I don't work (2 small children!) so it is my only income. I know that I am never going to make loads of money doing this, but do I have to start treating this as a business, rather than a way of earning 'pocket money'?

pin

i have had this email. it is basically for anti money laundering reasons. they just need to verify who you are.

HairyHatMan

mjk,
The law of the land is that you must declare any profits (or losses) to the IR no matter how small. I have always understood that any items bought with the intention of reselling them constitutes trading and should be declared regardless of wether it is new or second hand. Likewise, if you buy a pair of shoes, but later decide they're not for you, even without wearing them, then you can resell them at a profit and not have to declare it. I think it is the intention at the time of purchase that is the deciding factor (and which is also hard to prove either way).

motorguy

lets face it, if the IR undertake the mammoth task of investigating everyones selling practices, most of us are going to be donald ducked.

Lets hope everyone kept the receipt for that CD they bought four years ago and didn't like so flogged on ebay...

Pennywise

Have a look at the following link - explains the tax position of ebaying very well:-

http://www.taxationweb.co.uk/articles/article.php?id=146

Torby

Be interesting to see how they view someone in my situation...bought something in the "real world" to use in y business for £100, three months later discover I dont need it, sell it for whatever I get on Ebay, e.g. £60....therefore a loss of £40.
Do I tell the tax man I have a business , spent £100 on it and three months later lost £40 on it...will the inland revenue give me a refund....don't think so....