Inland Revenue cracking down on traders on eBay

rizla01

Once they start charging you tax on your income, that address will be registered as liable for CGT and this could be charged if you are found to be using part of your home for running a business. This would become payable on the sale of that property.

Redbedhead

FloFlo wrote:

So if I sold 10 widgets @ £20 but I bought 20 @ £10 and still have 10 in hand, I would show 0 gross profit.

No,

Income (10 widgets @ £20) £200

Purchases (20 widgets @ 10) (£200)
Less: Stock in hand (10 widgets @ 10) £100

Gross profit £100

windswept

Redbedhead wrote:

No,

Income (10 widgets @ £20) £200

Purchases (20 widgets @ 10) (£200)
Less: Stock in hand (10 widgets @ 10) £100

Gross profit £100

That's what most people don't understand, me included up until a few weeks ago, I had assumed that we would show a loss this time as we haven't actually started making money yet, but actually because we have had sales of about £1500 since october, on stock costs of £ 700, when you take off expenses (mainly start up costs) of £600, we actually have a profit of £200. Even though we have spent in excess of £3000 on stock , it doesn't count until it is SOLD. I think that most people think of stock as an expense, I know I did until someone put me straight on "cost of sales".

FloFlo

I'm still not sure, are you saying that I have to show the stock I have in hand as profit?

windswept

No, you don't count stock in hand at all until it has sold. I'm specifically talking about the short tax return for turnover (not profit) of £15000.
on earnings above that level, you have to show profit and loss and balance sheets etc.
on my partnership return, I wil be putting ( for example) :
turnover ; £1500
expenses ; ]£1300 ](made up of allowable expenses and cost of sales).
profit ; £ 200.


Even though we have spent over £3000 on stock, it's ignored till it's sold, as it's a cash flow issue not turnover related.

freebie_junkie

if you register and pay your NI/Tax you dont need to worry about this.

JohalaReewi

You might also be interested in the following recent threads...

http://forums.moneysavingexpert.com/showthread.html?t=365159

http://forums.moneysavingexpert.com/showthread.html?t=357460

ormus

generally, the tax man will expect/allow a business show a loss for the 1st yr and break even the second. then profit the 3rd yr.
so make sure your accounts follow this pattern!
the taxman wont be too concerned. he may/will investigate if you try to show a loss/breakeven at yr 4!

the taxman has basic info which shows how much a typical (eg) small retailer will make in a yr. dont try to be too smart with him!

but dont worry too much either, cause the ratio of investigators to companies is very much in our favour.
and im sure their priority is looking at the big naughty boys first.

flufff

I thought ebay paid an amount included in fees for this?Hence why traders need vat number to claim back?

ormus

vat and company/business/personal tax are very different.
vat evasion and vat fraud etc are frowned upon. and they will prosecute you.
the gov hates loosing money.
hence train robbers get 25 yrs. and insider share traders get 3 yrs!