Selling, HMRC and tax?

terra_ferma

It's in your interest to know asap, because although evidence of your taxable income will always be there for anyone to see (=ebay), you may end up missing out on deductible expenses or capital allowances if you don't keep receipt/evidence, or go the right way about it.

Also it helps to keep proper accounts from day one, instead of going through a plastic bag full or receipts on 6th April.
HRMC run useful courses all over the country.

Strapped

soolin wrote: »

There was a sticky thread once but it ended up in a bun fight with a now pPRd user who insisted that it was perfectly OK to not bother registering. Unfortunately that meant the message and help rather got missed in the general name calling and insults.

Maybe a locked sticky with links to the appropriate authorities would be in order? (HMRC re. registering as a sole trader or ltd company, Business Link for advice re. the same, trading standards re. Sale of Goods Act and UK Distance Selling Regulations, eBay re. business sellers fees/returns policies/etc?)

soolin

Strapped wrote: »

Maybe a locked sticky with links to the appropriate authorities would be in order? (HMRC re. registering as a sole trader or ltd company, Business Link for advice re. the same, trading standards re. Sale of Goods Act and UK Distance Selling Regulations, eBay re. business sellers fees/returns policies/etc?)

I think in order to be fair it would need to be unlocked as whichever of us wrote it may put some bias into it. Each board is limited with the amount of sticky threads we ought to have so just as a straw poll if i ask the main team for permission for a new sticky do we want to lose any of our existing ones?

I do think a business thread would be useful, we might also be able to clarify the nonsense where ebay insists that a private seller have a business account yet that needs not be declared if seller really is only selling their own goods.

macfly

If the OP follows some of the advice here, he/she is going to get into serious trouble. "It's all about intention" is absolute dangerous nonsense. If you buy a lamp with the intention of using it, but then sell on at a profit for any reason, you owe tax on it. HMRC don't ask you what you were thinking, they just don't care, nor could they enforce any of their rules under such criteria.
If they had the time and staff, they would have a birthday with most ebay sellers.
If you buy the odd thing at a car boot and sell it, no matter what your "intention", they wouldn't be interested - though technically you are a small business. There's zero chance of proving it .
If you buy regularly to sell on, you could get caught out.
By the way, don't approach HMRC thinking you will get great advice on this. Ask a qualified accountant.

martindow

Strapped wrote: »

Also, once you start trading, you have 3 months to register with HMRC or face penalties should you be discovered (and there are plenty of vigilantes on eBay who will report you).

This was true at one time but I believe now you are expected to register as soon as possible.

The most important thing is to keep receipts for all expenses you have and keep track of business mileage. You will probably be shocked to find how small your profit is - tax is paid on profit not turnover.

You may also need to pay class 4 NI contributions.

Best to get this all right from the outset. You can have real problems if a business takes off and you have not told HMRC about it.

macfly

It's still true and hasn't changed. You have three months. Someone saw the wording on the internet that you must register immediately, but the advice leaflet says straight away or within three months.

martindow

macfly wrote: »

It's still true and hasn't changed. You have three months. Someone saw the wording on the internet that you must register immediately, but the advice leaflet says straight away or within three months.

If you inform them after a couple of months, do you have to backdate your NI to the day you started trading?

macfly

Yes, if you had no other NI payments in place. That is, being self employed as a supplement to a regular job. What you do in those circs is defer NI and let them work it out at the end of the year.
Separate department though.

GoodNewmover

Strapped wrote: »

Also, once you start trading, you have 3 months to register with HMRC or face penalties should you be discovered (and there are plenty of vigilantes on eBay who will report you).

terra_ferma wrote: »

It's in your interest to know asap, because although evidence of your taxable income will always be there for anyone to see (=ebay), you may end up missing out on deductible expenses or capital allowances if you don't keep receipt/evidence, or go the right way about it.

Also it helps to keep proper accounts from day one, instead of going through a plastic bag full or receipts on 6th April.
HRMC run useful courses all over the country.

macfly wrote: »

If the OP follows some of the advice here, he/she is going to get into serious trouble. "It's all about intention" is absolute dangerous nonsense. If you buy a lamp with the intention of using it, but then sell on at a profit for any reason, you owe tax on it. HMRC don't ask you what you were thinking, they just don't care, nor could they enforce any of their rules under such criteria.
If they had the time and staff, they would have a birthday with most ebay sellers.
If you buy the odd thing at a car boot and sell it, no matter what your "intention", they wouldn't be interested - though technically you are a small business. There's zero chance of proving it .
If you buy regularly to sell on, you could get caught out.
By the way, don't approach HMRC thinking you will get great advice on this. Ask a qualified accountant.

Yes well having done some reading on here and at HMRC, the general theme is 'if you intend to make money let them know when you make your first sale, or face a penalty when you're found out'. They're not at all interested in intesions all they know is that your'e making money and they'll decide how much tax you pay if any.

They do say on their website "If you earn less than £5,075 per year you can apply for a certificate of small earnings exception and not pay Class 2 National Insurance contributions. However, you might decide to carry on paying them voluntarily to keep your entitlement to the State Pension and other benefits."

Hmm It's as though anyone looking to beome self employed a sole trader does three things then 1. registers with HMRC 2. apply for Income Tax and Self Assessment 3. National Insurance contributions.

Crowqueen

soolin wrote: »

There was a sticky thread once but it ended up in a bun fight with a now pPRd user who insisted that it was perfectly OK to not bother registering. Unfortunately that meant the message and help rather got missed in the general name calling and insults.

OK, it was just a thought.