Do you make money selling clothes on ebay?

BigAunty

I'm asking because those struggling to receive Working Tax Credits are often told on the benefits forum to go self employed, buying things from charity shops/car boot sales and selling them on ebay, just to make up enough hours to qualify for WTC.

I'm having a spring clean and have no trouble finding buyers on ebay for my used branded clothes like Monsoon, Boden, the North Face, White stuff and Fatface, for example.

But when I dropped off other stuff to local charity shops, I found that they either didn't have these kinds of brands on sale or were quite pricey (probably similar to what they would fetch on ebay), plus there is loads of stuff I doubt will sell on ebay due to over supply, like GAP and M&S clothing.

I'm struggling to understand how people make money buying clothes in Charity shops and then selling them on.

soolin

For the purposes of your question I don't believe the intention is to make lots of money but rather to convince the DWP that you are running a business so you qualify for WTCs due to number of hours worked.

It is perfectly possible to make money on eBay, but personally (and Im sure others may disagree) I think clothes one of the hardest categories to sell in without problems.

As a properly registered business seller the need to offer full refunds on returns where buyer changes their mind seems to be an issue as clothes often look betterin a photo, and fit is so hard to judge. You also don't get the benefit of the free listings, so all your unsolds are still costing you money.

BigAunty

soolin wrote: »

For the purposes of your question I don't believe the intention is to make lots of money but rather to convince the DWP that you are running a business so you qualify for WTCs due to number of hours worked.

...

Yes, I understand the qualifying criteria for the self employed to get WTC is time, not profit, so there has been little emphasis on promoting income in self employed ebay sellers. This will get a shake-up when the Universal Credit system is introduced which switches the emphasis around from time to income, scraps the time threshold and introduces greater conditionality,

I suppose because I sell my used branded clothes quite easily I assumed some sellers get their stock from charity shops but I found their stock quite poor and expensive. I'm not familiar with the business selling side of ebay so thanks for the info on the refund and fee issues.

ballisticbrian

Don't take this wrong, and to be fair, I haven't seen any threads on benefits, but if you are going to go to all the trouble to try to be self employed to get benefits, why not try a little bit harder to run a fully successful business and not rely on the state?

StaffsSW

BigAunty wrote: »

I'm asking because those struggling to receive Working Tax Credits are often told on the benefits forum to go self employed, buying things from charity shops/car boot sales and selling them on ebay, just to make up enough hours to qualify for WTC..

Could this not be construed as benefit fraud? How many hours per week do you need to declare in order to make no profit?

As above, I'd rather put the time and effort into making a genuine effort at running a small business, than having to fear every knock on the door or DWP envelope that arrives.

BigAunty

ballisticbrian wrote: »

Don't take this wrong, and to be fair, I haven't seen any threads on benefits, but if you are going to go to all the trouble to try to be self employed to get benefits, why not try a little bit harder to run a fully successful business and not rely on the state?

That's my opinion, too. However, lets blame the system (rather than the claimant) for setting up a benefit that actually rewards a person for having little business acumen and low or no profits.

For example, there is currently 212,000 households of couples with children in the UK receiving WTC who work 16 hours a week in total and who may be caught out by the change in threshold to 24 hours, otherwise they stand to lose around 4k WTC. Those coming to the benefit board saying they can't increase their hours by an extra 8 are often told by members 'do an Avon round, sell things on ebay, a bit of dog walking, window cleaning, etc'.

Supporters of WTC for the self employed say its vital to support a small start up until they grow enough until they are self sufficient, that it is particularly good for those with disabilities and dependents as they can fit their business around them.

Critics say that many WTC self employed claimants do the minimum (if that) simply to avoid the hassle of regularly signing on for JSA, that they can maintain their tax credits, council tax rebate and housing benefit indefinately, that they aren't truly running real businesses.

BigAunty

stevew8975 wrote: »

Could this not be construed as benefit fraud? How many hours per week do you need to declare in order to make no profit?

...

No, not fraud unless there is actually no business activity at all, I would think. The WTC rules do demand that the person is engaged in renumerative employment so it's not enough to just act 'busy'.

The hours per week to claim WTC differ according to whether the person has disabilities and dependents. For example, it's 30 hours per week for a single person without kids, 16 hours for a lone parent, and 24 hours for a couple with kids (used to be 16).

There are definately HMRC investigations into explicit fraud but also compliance investigations for people with low or no profits.

We get a lot of posts from the benefit forum by WTC self employed claimants who are being challenged to provide tangible evidence that the claimant has worked the hours they say.

For example, a guy who monitors their e-commerce site for 35 hours a week but only sold two products in a year has been told to pay back their WTC, a book seller on ebay was also targetted, a guy who makes things from donated items and sells them at boot fayres, so, too, a graphic designer with a very low turnover.

I assume that the HMRC have established some kind of trigger mechanism or random audits for WTC claimants who are self employed who they have doubts about the validity of their claims.

StaffsSW

BigAunty wrote: »

There are definately HMRC investigations into explicit fraud but also compliance investigations for people with low or no profits.

We get a lot of posts from the benefit forum by WTC self employed claimants who are being challenged to provide tangible evidence that the claimant has worked the hours they say.

I confess that I know very little about the intricacies of benefit system, but reading this makes me a little more confident in the processes.

Thank you!

soolin

On the MSE benefit board there have been stories of people investigated for fraud for trying this technique to show more working hours than they actually worked just to qualify. It might be worth a rummage in the threads over the past couple of months as there was a bit of a theme at one point where DWP came to the rather sensible conclusion that anyone who claimed to work x amount of hours a week and only earned Y resulting in an hourly average of pennies sometimes was not actively a business.

I do accept that many of us do or have made poor profits from time to time, sometimes if I sat and worked out my hourly rate based on time spent and actual profit I might be below minimum wage, but there is a difference between just earning a pittance to pay for extras and working flat out for 5p an hour and claiming to be a viable business for the purpose of benefits.

Just a tip as well, if you are going to go down this route, and I must say it makes me uncomfortable, remember to register with HMRC and pay NI as appropriate as otherwise I think you would be hard pressed to show a legitimate intention to trade. Same goes for running a proper ebay business account doing this on a private account would surely look like fraud?

soolin

This is an old thread but worth a look:

https://forums.moneysavingexpert.com/discussion/3240902

BigAunty

soolin wrote: »

...
Just a tip as well, if you are going to go down this route, and I must say it makes me uncomfortable, remember to register with HMRC and pay NI as appropriate as otherwise I think you would be hard pressed to show a legitimate intention to trade. Same goes for running a proper ebay business account doing this on a private account would surely look like fraud?

No, I'm not planning on going down this route. I am self employed in a different field through a limited company. I do not qualify for any benefits.

I was really just curious about the reality of buying goods in charity shops, clothes especially, versus the casual 'oh, just flog tat on ebay and say it takes you x hours ' comments to those wanting to keep collecting WTC on the benefits forum.