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

soolin

arushofblood wrote:

Mr Financial Man didn't think it would be a problem. Assured me that they wouldn't look into my account, would just rely on what I was declaring each year and would work from that. They didn't need to know about my Ebay ID so wouldn't go checking back on my past sales either.

*

So basically your financial man has suggested you defraud the Inland Revenue :eek:

He is right that the tax man will work on your figures, but most people don't suggest that is a reason to defraud. He might also want to consider the people that get audited every year and face penalties if they are deemed to be deliberately witholding tax.

It has also been pointed out to me that the items bought on a relatives card could leave you with a problem if the Revenue got nasty..which frankly they rarely do. Your taxable profit is based on sale proceeds less expenses and original purchase price. So if you are selling items with no original purchase price your profit actually sky rockets as does your tax unless you can gain access to the purchasing receipts and prove they are your stock should you be questioned.

apprentice_tycoon

isn't the amount of money goinging to the OPs bank account the critical figure here? if she can't account for regular chunks of money appearing in her account (I assume that they can check with paypal as well if they want to) the revenue going to assume that it's all from sales and therefore taxable - it would be much better to show a lot of expenditure on stock, not less...

soolin

As usual AT you explain things much better than me!

So the basic question here would be you put in a small 'guestimated' set of accounts and the Revenue ask for more details or audit your accounts for which they will want to see your bank statements, and bang..all hell breaks loose. This is out and out fraud, nothing less and I am worried that a financial advisor, however little he knows about tax can even think it a good idea.

arushofblood

Please be assured that I won't be doing anything that would lay me open for grief in the future ! Avoiding such grief was the reason I first started the thread

soolin

arushofblood wrote:

Please be assured that I won't be doing anything that would lay me open for grief in the future ! Avoiding such grief was the reason I first started the thread

Well said, that was why I was worried. You seem quite sensible and it is very unfortunate you came across a less than honest FA to give you advice.

Stick with your plans to sort this out properly, then you won't need to have any worries about the future hanging over you.

Soo

apprentice_tycoon

This FA seems to be barking up the wrong tree completely, as I said, the more expenditure you can legitimately show the less tax you'll pay so in some respects it's a shame that it's not all spent in your name.

Can I ask if you've looked back through your bank statements and roughly worked out how much you've had through your account that is ebay connected? some of this figure will be because the buyer has paid for postage so that doesn't count towards your sales figures, but if you get a rough idea how much money you've had in through sales and roughly how much you've paid out for stock & ebay fees you'll see that the more receipts you can find the better it looks for you

arushofblood

apprentice_tycoon wrote:

This FA seems to be barking up the wrong tree completely, as I said, the more expenditure you can legitimately show the less tax you'll pay so in some respects it's a shame that it's not all spent in your name.

Can I ask if you've looked back through your bank statements and roughly worked out how much you've had through your account that is ebay connected? some of this figure will be because the buyer has paid for postage so that doesn't count towards your sales figures, but if you get a rough idea how much money you've had in through sales and roughly how much you've paid out for stock & ebay fees you'll see that the more receipts you can find the better it looks for you

Yes, but the more you spend the more you make and the more you are taxed ? ( Sorry, not argueing )

apprentice_tycoon

yes and no - if I spend £20 on a gubbins to sell, and after I've sold it for say, £23 and paid my ebay fees I have only got £1 profit then I'm only going to be taxed on that £1 - if I'd sold the same gubbins for £60 then I'd be taxed on an awful lot more.

As I say the number one, most crucial figure is how much money you've got in your bank account that wouldn't have been there if it wasn't for ebay -

lets assume you'll have sold your own stuff for maybe a year or so before you started looking for stuff to buy, from then on you are a trader -for every year after that there were odd amounts coming in from paypal and cheques totalling, say, £2200 per month - that's the figure that's in black and white and can't be fudged, or 'lost' somehow then the more expenditure you can show, the better - so - if you have £2200 coming in, £200 was what the buyers paid for postage, £250 for ebay fees, the stock cost you £1500 then you haven't got much left to be taxed on, it will only be £250, BUT if you can only prove that you spent £50 on stock then there is much more profit to be taxed on.

EDIT - TO CLARIFY.

If you are selling stuff that someone has given you to sell that is their own property (they don't have a PC maybe) and you hand over all the proceeds to them (apart from the ebay and paypal fees and wrapping material etc) then you have not made a profit at all

If you are selling something for someone that they've bought to sell and you hand over the proceeds to them then they are making a profit, not you and they are in a taxable situation

If you are buying in to sell on even if it's with someone elses credit cards you are making a profit and the more expenditure you can show the less profit you'll have made to be taxed on

Snooze_Control

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.

:T

All I'll say is good advice.

I'm speaking generally here, not specifically about paying tax on your Ebay sales - it's quite easy to "get one over" on the tax man. From my own experiences (and also from what's happened to other folks I know), as long as you pay some tax of a believable amount then they don't bother looking too hard at what you've actually earnt because they've got bigger fish to fry. Therefore, I recommend following Greeneye's advice, wiping your slate and starting over with different bank account, Paypal and Ebay IDs. Unless you give them a reason to investigate you then you'll probably never hear anymore of it, as long as you pay what's due for this year at the end of the year and pay it on time.

If you don't pay any tax at all or are late in paying then you will have them on your back and they'll go through everything with a fine tooth comb. They won't just do it for that one time either, it'll be every year after as well.

SC

soolin

Polite BG reminder

I will remind people again that this is a money saving site and we should limit our discussions to money saving in a legal and honest way. Fraud does not fall into the legal and honest category and any posts suggesting this will be referred to the moderating team for moderation.

Posts will be temporarily removed and referred to abuse where they positively encourage illegal behaviour.

Soo