House clearance stash found

shaun1d

Hi all.

A little background first.

I am self employed running a small house clearance business with my wife and son.
This involves customers paying us to dispose of unwanted furniture and effects from empty, (normally due to a death in the family) houses.
These items we then recycle either through reselling, charity or sorting and disposing.

Recently we have come across an unmarked stash of money within an item we cleared, it is impossible to know where this money came from or how long we have had it, as all of our items are stored in the same place.

My question is : am I liable for income tax on this money?

I would appreciate any members comments.

Regards Shaun

woody01

My question is : am I liable for income tax on this money?

I doubt it as its not yours.
You might be entitled to a 'stretch' for keeping it though when a relative adds 2+2

kalaika

I would have thought that you would, in the same way that you would pay tax had it been any other asset.

For example, lets imagine two scenarios:

1 - You agree a house clearence for, say £1,000 (I don't know how much you would charge - I'm just using this as an example) and within that clearance you find a box containing a painting worth £10,000.

2 - The same house clearence for £1,000, but the box you open contains £10,000 in cash instead.

In 1, you sell the painting, get £10,000 for it and bank this cash. Your total income from this job is £11,000 on which you would pay tax (net of expenses, of course).
In 2, you bank the cash straight away, effectively skipping the middle step of finding a painting and selling it. The end result is the same, you still have a total income from this job of £11,000 and so would still pay tax on this amount.

Rolo_Tomasi

The question I'd ask is not whether or not I have to pay tax on the money but am I allowed to legally keep it? I think you should contact your local police station, explain the situation and take the money in to them. If nobody claims it then I think it will come back to you (although not sure about this) and at that point you can worry about the tax treatment.

My initial thoughts are that it would be taxable as a receipt from trade as you would not have received this money if you weren't in the business you are.

Pee

Hang on, in the example above, if you got the £10,000 painting, wouldn't that be a CGT issue not an income tax issue? Or maybe it is because it's a business?

tyllwyd

Is it possible to argue that whoever sold you the piece of furniture that contained the money sold you the furniture plus contents (although they didn't know what the contents actually were)? If that was the case, I'd say it was part of the profit you made on that item, so part of your business.

I might be doing them a disservice, but I would imagine that most people in your line of business wouldn't even consider declaring the money, it would just go straight into their back pocket & get spent.

It would feel morally right to contact past clients & try to give it back to them - but if you can't link it back to a job, then that's going to be pretty much impossible. Or you could give it to charity?

PlutoinCapricorn

I thought that someone in your line of business would need to keep a log or audit trail of all the stuff in case HMRC ever investigate. Item list, where taken from and contact details, when sold and how much for.

I know that the clearance fee is the income, but if they want to see where all the money on your bank statements is coming from then surely you need to be able to match it with items and proof of taking/selling?

MrCarrot

I would have thought, legally, the matter should be reported to the Police, since it is not your money to keep.

Having said that, if the owner knew about the missing money I am assuming they would have been in touch with you by now.

Is there no way of tracing it back to the original owner?

lincroft1710

As this was hidden away and belonged to the deceased, it is doubtful that the relatives/beneficiaries knew anything about it, so you can't really contact past clients and ask if they've lost any money. You could only ask if they recognised the piece of furniture it was in, which they may not.

Is it income? The money wasn't earned for performing a service, it wasn't a tip or gratuity, it is in fact a find. As a private person if you found money, took it to police station, money unclaimed, so it became yours, you don't pay tax on it. Is this any different?

Debt_Free_Chick

I think the question of "ownership" of the cash is interesting. The OP was paid to clear a house and if the cash was stored in an item he was contracted to clear, then the cash belongs to him as much as the item itself It's just a case of a careless seller, surely?

Agree with Kalaika though .... the discovery of the cash simply increases the value of the items he was paid to clear. It should be declared as a "gain" in the same way as the sale of any other cleared items.

esmerelda98

Why on earth would the money not belong to the original poster? Does anyone seriously think people in this line of work make a living selling tatty old furniture? I must admit I do not know how much these people charge, but I imagine it is a fairly modest sum, to encourage people to use their service while the real money comes from selling collectibles and antiques which are not obviously valuable to the untrained eye. Maybe these days with programmes like 'Cash in the Attic' and 'Flog it' there are fewer bargains to be had, so the fee charged is more reflective of the labour involved, but unless there is something specific in the agreement signed, the house clearance person is free to dispose of the property (and money is property) as he so wishes. Since the money is income, tax needs to be paid on it.

The sensible thing is to have a bit of a rummage yourself and call in a trusted antiques 'expert' before you instruct someone to clear the property.