Selling, HMRC and tax?

macfly

Good advice if you have the time. Many local councils, via business link, do excellent courses also. They can be a bit more in depth as they are usually conducted by retired or semi retired accountants and business owners.
An interesting answer to the question of when to register. If you followed it, and registered after six months as you had not yet set up your sales medium - I don't think that would be acceptable to HMRC. Leaflet SE1 says as soon as you start or within the first three months. So what constitutes the start. They can't even write a leaflet clearly.

JAYk_2

macfly wrote: »

Good advice if you have the time. Many local councils, via business link, do excellent courses also. They can be a bit more in depth as they are usually conducted by retired or semi retired accountants and business owners.
An interesting answer to the question of when to register. If you followed it, and registered after six months as you had not yet set up your sales medium - I don't think that would be acceptable to HMRC. Leaflet SE1 says as soon as you start or within the first three months. So what constitutes the start. They can't even write a leaflet clearly.

Interesting. HMRC has not made it clear whether a person registers with them when the trader has the goods ready or when the trader make their first sale?

Within the first three months? That sounds like within the first three months of having made a sale or two. Correct or not?

macfly

That's almost the way I see it. From the time you list your stock is better.You would get different answers from a number of tax office employees. The subject rarely crops up as most people starting a business sort this out straight away.

Norfolk_Jim

What I often wonder is, if I decided that I'd like to buy & sell through E-Bay, that is trading - Would I be able to deduct losses against my tax paid on my full time salary?

If that was so, then it would be a fair compensation for the losses I might suffer from rogue buyers.

I seem to remember this being the case 20-30 years ago when I was briefly self employed but also took any short term employment on offer as I was a rubbish businesman, but I never see any reference to this now, so maybe it has change?

I'm sure people here know - If I can tell between those who do know and those who just think they know - and thats not always easy, LOL

macfly

The quick answer is yes. And against the last three years if you don't use up all the loss. But it does require professional advice..

antrobus

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.

Technically accurate, but nevertheless misleading. You might well 'owe tax' on the sale of the lamp, but the tax owed would be capital gains tax rather than income tax. Indeed, since the first £10,100 of capital gains are exempt, not to mention the fact that there is a general exemption for chattels that are individually worth less than £6,000 each, it is highly unlikely that any tax liability would arise on the £5 profit arising from the sale of a lamp. Therefore the occasional buying and selling of items for a profit would not in itself generate a tax liability.

There are indeed people who do indeed spot a bargain at a car boot sale and flog it for a profit on ebay (or through TradeIt, whatever). Do it once or twice and it's neither here nor there; start listing twenty or thirty items a week and it begins to look like a business. Which is the real question -it's not so about whether or not you're making money, but about whether you're trading as a business. The problem is that there aren't any hard and fast rules, it all depends on various things, such as the nature and scale of your activities, and yes, 'intention' is one of the factors involved, as the 'Profit seeking motive' is one of the so-called 'badges of trade', as HMRC likes to call them - See http://www.hmrc.gov.uk/manuals/bimmanual/bim20200.htm (Although it would be dangerous to claim that intention was the deciding factor.)

So the answer to the question, "At what point is an auction seller (eBay, Amazon, Etsy, CQOut etc) required to pay tax and or register with the HMRC?" would be that the OP has supplied insufficient data. OP would need to be far more specific about what exactly they're selling, where they're getting it from, and how much of it they're selling. (And so I think it would be dificult to compile a 'sticky' guide that gave any kind of authoratative answer.)

It is however a question that every auction seller should have at the back of their mind, as HMRC do have their own bot that automatically scans the listings looking for certain patterns.

antrobus

Norfolk_Jim wrote: »

What I often wonder is, if I decided that I'd like to buy & sell through E-Bay, that is trading - Would I be able to deduct losses against my tax paid on my full time salary?

Maybe. Funnily enough HMRC are sometimes reluctant to accept that you are running a business if you're making losses. You would have to convince them that you were carrying on the trade "on a commercial basis, and "with a view to the realisation of profit".

See http://www.hmrc.gov.uk/manuals/bimmanual/bim75705.htm and sundry linked pages if you're really interested in the detail.

Crowqueen

it is highly unlikely that any tax liability would arise on the £5 profit arising from the sale of a lamp. Therefore the occasional buying and selling of items for a profit would not in itself generate a tax liability.

Wrong. Absolutely wrong. Anything bought to sell on is being traded and is therefore not a personal chattel or exempt from tax. You are confusing two issues - eBay's business advice is clear enough on that matter and what you go on to mention about buying the odd thing from a car-boot sale.

(And so I think it would be dificult to compile a 'sticky' guide that gave any kind of authoratative answer.)

And yet eBay have a whole web page dedicated to it right here, including their definition of business trading.
http://pages.ebay.co.uk/help/policies/business.html

"You should register as an eBay business if you:

• sell items that you have bought to resell
• make items yourself and sell them, intending to make a profit
• are a Trading Assistant
• buy items for your business"

Pretty unequivocal.

Would I be able to deduct losses against my tax paid on my full time salary?

As far as I'm aware, HMRC don't like people doing this.

macfly

Another reason why a sticky would be a mad idea.
Capital gain on an item bought for a few quid and sold on at a small profit? Much as I would love to defend that one - not a chance. That's income pure and simple.
And funnily enough, HMRC are fully aware that a business, especially a new one trading during the toughest recession in modern times, often does make a loss. It's why the government has relaxed the rules on claiming them.

macfly

Crowqueen wrote: »

Would I be able to deduct losses against my tax paid on my full time salary?

As far as I'm aware, HMRC don't like people doing this.

Here we go again. You just can't stop yourself. You are not aware, therefore resist commenting, you are out of your depth.
It can be done, it is done, and I have done it myself for clients without a murmur from HMRC.
May I also point out that ebay are not the definitive authority on what constitutes a business. Those pages are there to cover their asses. However they are basically correct, hence no harm can come from reading them.