Stock on hand headache!

chemical.galaxy

I have around 300 items in my shop, each item is different and I am constantly listing more as they sell.
This morning my stock on Ebay is around £6000 if I sold everything (I wish!)
How do I work out stock on hand for HMRC given that the items are constantly changing. Do I need to go through each item and see what I paid? this means trawling through receipts which go back for months...

gustav

Why do HMRC need to know?
They dont really care how much stock you have.
If its for your tax return (assuming your t/o is less than 70k), there isnt anywhere on the form to put this figure.

chemical.galaxy

Stock on hand is taxable

gustav

Stock is taxable in what respect?

If you're doing your own tax return because you're below the 70k turnover threshold, then HMRC dont need to know your stock. I've done this, and know this.
If you're over the limit and have to submit accounts, you should be talking to an accountant.

G.

chemical.galaxy

Thanks you are correct - I phoned HMRC and they confirmed that.

martindow

But you do need to know your stock at the beginning and end of your accounting year otherwise you can't work out your profit to put on your tax form.

antrobus

martindow wrote: »

But you do need to know your stock at the beginning and end of your accounting year otherwise you can't work out your profit to put on your tax form.

Exactly. HMRC might not need to know the stock figure, but you do, otherwise you can't work out your profit, and for certain HMRC need to know that number.

There are two ways of working out your stock figure:-

(1) you go through each item, note what each item cost, and perform the necessary arithmetic or,

(2) you make a guess

Lots of small businesses plump for option 2 for some reason. In your case you apparently already have some idea that your stock would sell for £6000. Presumably you also have some idea of the markups you aim to make. OK they might vary from line to line, but you should be able to work backwards and come up with a figure that's reasonable approximation.

chemical.galaxy

Yes I can do a reasonable approximation - that will have to do!

JCS1

Stock is valued at the lower of cost or net realisable value (e.g. if bought item for £2 each, but can only sell them for 50p, they would be in your stock at 50p).

gustav

martindow wrote: »

But you do need to know your stock at the beginning and end of your accounting year otherwise you can't work out your profit to put on your tax form.

No you dont.
Have you actually filled in a self-assessment income tax form?
I know when i did mine in january there was no question about "profit".

G.

antrobus

gustav wrote: »

No you dont.
Have you actually filled in a self-assessment income tax form?
I know when i did mine in january there was no question about "profit".

G.

Mmm....

Here's a link to the pdf version of the short self-assessment income tax form for self-employment;

http://www.hmrc.gov.uk/forms/sa103s.pdf

Scroll down and you'll see the heading 'Net profit or loss' and the instructions to put the profit number in box 20.