Selling, HMRC and tax?

antrobus

Crowqueen wrote: »

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.

Well actually it was you that bought up the subject of "buying the odd thing from a car-boot sale" as in;

Crowqueen wrote: »

Now say you see the same lamp at a car boot sale for £5. You think, "hey, that might go for a good price on eBay", you buy it, you take it home, and you sell it for £20. You were trading and you owe tax on that £15 (and if you have another job then you will be making enough money to cover your personal allowance).

So I believe that you have only succeeded in confusing yourself.

To be blunt what eBay has to say on the subject is neither here nor there. What HMRC thinks about things is far more to the point. See 'BIM20200 - Trade: badges of trade: contents' at http://www.hmrc.gov.uk/manuals/bimmanual/bim20200.htm. In particular I would read the page entitled ' - Trade: badges of trade: repeated operations' and pay particular attention to the cited case of Pickford v Quirke [1927] 13TC251 and the words of Rowlatt J as in:

"It is very well known that one transaction of buying and selling a thing does not make a man a trader, but if it is repeated and becomes systematic, then he becomes a trader and the profits of the transactions, not taxable so long as they remain isolated, become taxable as items in a trade as a whole".

antrobus

macfly wrote: »

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.

Try quoting Pickford v Quirke [1927] 13TC251.

In any case, as far as the example cited was concerned of someone making a £15 profit on a lamp purchased for £5; it would be pretty difficult for HMRC to demonstrate that it was not an asset "acquired for personal enjoyment" and, more importantly, they likely wouldn't give a flying thingmy one way or another for £15.

macfly wrote: »

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.

Granted. But maybe is a better answer, without further infomation on what the SOB in question is up to.

antrobus

macfly wrote: »

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.

That I can agree with without qualification.:D

macfly

Don't get me wrong, I'm by inclination a poacher not a gamekeeper. I spent many years looking for holes in the rules and found countless. And I agree HMRC have not got the resources to start taxing car booters on the odd purchase or sale. It was the original advice which provoked my response. Letter of the law and it's application are miles apart. When you get this stuff in front of a judge, they tend to shake their heads at the mess we have made of it as a nation.
I've argued intent many times, and mostly succeeded. However. other factors take much higher precedence.
The only sensible advice is to consult a qualified accountant in whatever field. I still find myself doing so in areas I'm not sure about.