Tax discussion -was -At the risk of being flamed !!

arushofblood

martindow wrote:

You can see many accountants for an initial free half hour consultation so I would phone around and go to a few of these to seek their advice. My inclination on your situation is to go to the IR and be totally honest about it everything. Ignorance is not considered an excuse but being open about it and asking for their help and advice on what to do is much better than them investigating you. Good luck with it all.

Thanks martindow

Without whinging here, I was at home looking after kids in a relationship that I needed to get out of. Having given up my career to look after the kids, I needed a way to earn money to enable me to get out of the marraige situation and to provide for the kids independantly as far as I could. I dabbled with Ebay, second hand stuff, made a few pounds here and there. Found the confidence and ability to make a few more pounds from buying and selling new stuff. Ultimately, I was confident enough that I could contribute enough myself to enable me to start a new life with the kids. This I have now done. I don't claim any benefits only benefit from maintenance and what I earn. I've worked hard to get a 'business' up and running, something that I've achieved like many others without any business skills or knowledge. I now just want to take it further and realise that I do indeed run a business that I have proudly built from scratch, and do what I need to do. Ok, I have obviously not gone by the books through my past ignorance but people like me shouldn't be flamed for having a go a setting up their own business surely ? Er, not that I am being flamed here, just that I truly hadn't realised all that I should have done from the start and don't look forward to being penalised for my ignorance if I venture to the taxman or VAT Office with my hands up. Almost makes me feel like giving it all up and trying for a 'normal' job back out in the big wide world.

baffcat

Hiya

Soo's given you a lot of gen, and contact numbers, so you're already part way to sorting yourself out.

What you have to remember when talking about tax, is that there's really two sorts of tax involved in running a business/being self employed.

Income tax / National Insurance. If you buy anything to sell, register with your local tax office, and preferably within three months of starting. You don't have to tell them anything except you're earning some money and want to register. They'll send you a form, and every three months a bill for NI, of, I think, about £28. Regardless of whether you're employed and sellling some stuff on the side, or if you're doing it full/part time to earn some extra, you need to tell them ASAP. Income tax will be based on your profit, not turnover, so keep every single receipt you ever get. It's better to have receipts your accountant will be able to use, than not to have receipts you could've used to reduce your tax bill. It becomes second nature to ask for a receipt everytime you hand over cash, a cheque or a card. You'll pay income tax after the end of the tax year, not during it. At least, that's true of your first year of trading, and that's all you need to think about for now.

VAT. Really, if you're turning over enough to be concerned about VAT, you should already be registered as self-employed, and maybe be using an accountant already. The thresh-hold for registering for VAT is a turnover (not a profit) of £61000 per annum, or an expectation of turning over that amount in the short term (1 month? 3? I can't remember, but as I'm staying below that level, I don't need to remember).

Contact your tax office, and do it now. If you have been trading a while, better to approach them than for them to target you. They may impose a fine - possibly - but they'll be on your side as you've gone to them. They want you to do well, so they can get their share of your profit, so I can guarentee they'll be nce. They have seminars regularly, about a morning's worth, to explain what anyone working for themself needs to do.

If you know an accountant, go see him/her. As someone else said, most will offer a free 1/2 hour or hour consultation, in the same way a tradesman will spend time in your house to offer a free quote. Both do it in the hope you'll become a customer. If you don't know one, see if anyone you know can recommend one (recommendations are often the best way to get a good accountant). Failing that, contact the Institute of Chartered Accountants, who'll have a list for your area. Again, do it now, don't put it off. Any accountant you decide to engage will want as much detail as you have regarding your sales and expenditure.

Working for yourself can be a good way to live, and of making a living. The tax side is, believe it or not, not as frightening as it appears when you start off - honestly.

Good luck

Baff

Hoddie_2

You may be best registering your company in The Cayman Islands or Bahamas for tax purposes. Speak to an international corporate lawyer to find out more.

Even if this were done, UK tax would be due on any income the company passed to the directors who were resident in the UK. Failing to declare such income is tax evasion and the penalties for this are far greater than simply not declaring income from a sole trading position.

arushofblood

Thanks again for your support Thanks Baffcat. I guess it's a priority to get sorted and other things ( and loads of 'em *sigh* ) should go on the backburner until I am.

I've already sorted a finacial advisor for Monday !

soolin

arushofblood well done, you've taken the first step to sorting this out and I hope it goes well for you.

Soo

arushofblood

Thanks Soo

Like everyone I guess, the thought of handing over cash to the taxman when I need every penny I earn is a bit of a bum but I think having a clear concious would be better for me... just

greeneye

Well "At the risk of being flamed" and given that SC hasn't stuck his head up on this one ;+)
I'd dump your present ebay/paypal/bank account and start afresh and declare it all from now on using Soo's advice.

I know Soo won't be able to advocate this - but sounds like you've had quite a high turnover the last few years and been keeping zero records/receipts...personally I'd distance myself from the past.

arushofblood

greeneye wrote:

Well "At the risk of being flamed" and given that SC hasn't stuck his head up on this one ;+)
I'd dump your present ebay/paypal/bank account and start afresh and declare it all from now on using Soo's advice.

I know Soo won't be able to advocate this - but sounds like you've had quite a high turnover the last few years and been keeping zero records/receipts...personally I'd distance myself from the past.

So, if I did ring up the Tax Office, said that I'd like to register having started as a business at the turn of the year, here's my business name ( presumably my Ebay username ), blah, blah, blah... are they likely to look at that Ebay ID to check all my past sales then ? I wouldn't want to start a fresh with a new ID having built up such a good account.

I don't mean to sound so deceiptful !

apprentice_tycoon

arushofblood wrote:

So, if I did ring up the Tax Office, said that I'd like to register having started as a business at the turn of the year, here's my business name ( presumably my Ebay username ), blah, blah, blah... are they likely to look at that Ebay ID to check all my past sales then ? I wouldn't want to start a fresh with a new ID having built up such a good account.

I don't mean to sound so deceiptful !

No-one has ever asked for my ebay ID name but if you do give it and you've got lots of feedback you might have an uphill struggle trying to explain that you were clearing out the attic unless your sales were from, say, a collection of hundreds of comics that you sold one at a time to get your score to be that high.
I made the big mistake of 'starting' my business from the day that my ebay account opened because for the first few months of using abay and amazon I sold my own stuff not items bought purely to sell, I can't really go back on that now....

My accountant costs me around £200 a year and I reckon that he saves me as much by pointing things out to me and also the time I save by not filling in the returns and fretting about stuff!

arushofblood

Seems there are other benefits if I aquire self employment status too ? ( Along with my single status that should be finalised soon ). Working Tax Credit and Child Tax Credit ? I'm presuming this is a different thing to the monthly child benefits payments ? Sorry if this should now be on another forum !