Disposing of the leftovers from self employment

BorgleBoo

Around 2 years ago I was unemployed. While I was job seeking I paid about £1200 to have the components of several barbecues manufactured, which I hoped to assemble and sell online. It was not intended to be a commercial venture. It was a trial-run to see if it had the possibility of being a viable business.

I contacted HMRC and asked if I had to register as self employed. I explained that it was highly unlikely to make a profit. Nonetheless they told me I needed to register and I did. I was later told by another person at HMRC that this was a mistake and I should not have had to register as self employed at all.

During the year (as a result of being self employed) I had to file a declaration with my local housing benefit office declaring my profits. Every month I wrote a big fat 0 on the form.

At the end of the year it was clear that a small entrepreneur cannot possibly sell these sorts of things at a price that would begin to make a profit. I was still £900 down on my original investment. I gave up on the idea and went back to university. I informed HMRC that I was no longer self employed.

The remaining unsold barbecues sat in pieces in the shed for the last 2 years. I finally got sick of looking at them, so I assembled a few. I have swapped a few away in non-cash trades on a few online trading sites, and have sold 3 of them for cash. In each case the amounts involved were far lower than the costs of the materials involved.

When looking at the HMRC website they specified that income must be declared if you "make items yourself and sell them, intending to make a profit" (my emphasis).

I do not intend to make a profit, and to do so would not be possible anyway.

In the last 2 months I have spent £110 on new tools to assemble them and postage, and have received £74 in cash sales. This does not include the (small) items I traded some barbecues for.

Do I need to declare my online swaps and sales to anyone? We are currently in receipt of benefits.

Thank you for any advice.

Randvegeta

I really doubt you will need to declare your swap/trades. I'm not even sure you need to declare the sale of these left over BBQs. After all, who has ever declared income on a sale of a second hand good they got rid of on Ebay?

The key I believe is "intending to make a profit". Since you do not plan to do so, and mentioned it is practically impossible, does not constitute as a business.

BorgleBoo

Just to be on the safe side I have continued keeping accounts so that I can prove I had no intention of making any money. The sales have also not been anywhere near the sorts of levels that would raise questions.

I'd rather not have to go to the council for a "judgement" on the matter. They are hard enough to deal with when they have clear-cut guidelines to follow - but ask them for a decision on something they've never heard of before and you're in for a real nightmare.

If I thought I had to declare this, truthfully I'd just give away the remaining barbecues in preference to tackling the bureaucratic nightmare. They just aren't worth enough money to justify the hassle.

Randvegeta

You should be fine. People give/sell their old stuff all the time. It's normal. I think tax applies only when you buy/sell somthing with the intention to make a profit. For example, if you get rid of your second hand goods, you don't need to charge VAT. But if you buy second hand goods to sell on (for a profit), you need to charge VAT on the whole thing... at least, that was my understanding. Crazy VAT is paid on the same item twice, but hey!

grey_gym_sock

seems pretty clear that you're not self-employed, at least now. just tell them you're not self-employed. that is truthful, and won't encourage them to investigate. in the very unlikely event that they do investigate, the records you've been keeping should sort it out.

king_of_google

I really wouldn't worry about it! At least you have a conscience about it! They would never home in on you for trying to clear out your back garden shed! Think about people who are self employed who use ebay to sell things they dont need any more, i certainly wouldn't declare that I had just sold my faulty iPad!!

BorgleBoo

But surely the point is what I'm doing is not fraud, not that I'm unlikely to get caught.

paulstar

If everyone was a conscientious and honest as you this country would be a much better place!

As others have said, you're not self employed. Selling old bits and pieces from the garage is not taxable. Even if it was taxable it sounds like you'd be declaring a loss, so no tax would be due anyway.