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Is this possible? Would I be liable for tax?

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Please bare with me here, I'm just thinking out loud

I have a credit card with 0% on purchases

It has a £3000 limit on it but I'm only allowed to take out £500 cash

I'd like the full £3000 for a short term loan so my idea was as follows

I'm a web designer and I could hypothetically set up a page so that I could purchase an item (fresh air for example) using my credit card for £3000. That £3000 would be paid into my bank account. Hey presto I have a £3000 loan at 0%.

Question is, if I were to do such a thing would I be liable for tax on the sold item (fresh air)

Comments

  • System
    System Posts: 178,344 Community Admin
    10,000 Posts Photogenic Name Dropper
    Short answer - Yes
    This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com
  • ok thanks, I've been told the same elsewhere

    was thinking I was being clever for a moment there :embarasse
  • what kind of tax?

    tax on profit? yes, if there is any profit. suppose you set up a new bank account for your fresh air business. when it receives the £3k from the credit card company, it decides to refund the customer, not by crediting their card, but by making a fasterpayment to the customer's bank account (i.e. to your personal bank account). then there is no profit.

    VAT? fresh air won't be exempt, but £3k turnover wouldn't require you to register for VAT.

    would this violate the credit card company company T&Cs, for the merchant or the customer, or both? i have no idea.

    would the CC company charge a hefty percentage to the merchant? definitely.
  • Could you not just do your regular spending on the card?
  • pjread
    pjread Posts: 1,106 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    [QUOTE=grey_gym_sock;[URL="tel:63753631"]63753631[/URL]].

    would the CC company charge a hefty percentage to the merchant? definitely.[/QUOTE]

    This. Just do your 'normal' spending on the card and save the cash.

    I expect the above could work fine but unless you have access to some kind of fee-free payment processing it'll cost you... Possibly enough that you might as well get a SBT card and avoid the hassle.
  • jamesml
    jamesml Posts: 265 Forumite
    Plus as well it might not technically be fraud, but you are definitely trying to get around the rules, so the CC co is unlikely to take a nice view on it if they were to find out.

    You'd also have quite a lot of costs involved in processing the payment.
  • le_loup
    le_loup Posts: 4,047 Forumite
    If only "entrepreneurs" would spend half the energy they spend on tax fiddles in the growth of their businesses, wouldn't they thrive?
  • pjread
    pjread Posts: 1,106 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    [QUOTE=le_loup;[URL="tel:63758578"]63758578[/URL]]If only "entrepreneurs" would spend half the energy they spend on tax fiddles in the growth of their businesses, wouldn't they thrive?[/QUOTE]

    Heck if someone wants to point me in the direction of this reliable, fee-free payment processing (even if I have to write the code to interface with it) then please do and I can probably retire on the cc cashback from daily payment-to-the-limit/pay whole balance online. even at 0.5% (MBNA platinum?) that's £50 a day on a 10k limit for not a lot of ongoing work. And after a few months rinsing that, what would they give a man with a 300k/month paid-back-on-time revolving credit line... :)
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