Is this possible? Would I be liable for tax?

oasis1979

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)

System

Short answer - Yes

oasis1979

ok thanks, I've been told the same elsewhere

was thinking I was being clever for a moment there :embarasse

grey_gym_sock

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.

Laurajo_2

Could you not just do your regular spending on the card?

pjread

[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

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

If only "entrepreneurs" would spend half the energy they spend on tax fiddles in the growth of their businesses, wouldn't they thrive?

pjread

[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...