Does buying & selling the odd car class me as a trader?

ferry

Just thinking out loud but as a side line for a little extra income I'm considering buying and selling cars.
It would be just the odd one here and there for small profit,one at a time from home and on this basis wanted to ask if it's wise to register as a sole trader to do this and do the whole HMRC thing?

Just thinking out loud but appreciate any feedback

F

colino

If you are buying cars to sell it for a profit you are a trader and should inform HMRC of your business.

Nodding_Donkey

Of course it makes you a trader.

LandyAndy

ferry wrote: »

Just thinking out loud but as a side line for a little extra income I'm considering buying and selling cars.
It would be just the odd one here and there for small profit,one at a time from home and on this basis wanted to ask if it's wise to register as a sole trader to do this and do the whole HMRC thing?

Just thinking out loud but appreciate any feedback

F

How many are you planning to buy/sell. One a week? One a month? One a year?

motorguy

ferry wrote: »

Just thinking out loud but as a side line for a little extra income I'm considering buying and selling cars.
It would be just the odd one here and there for small profit,one at a time from home and on this basis wanted to ask if it's wise to register as a sole trader to do this and do the whole HMRC thing?

Just thinking out loud but appreciate any feedback

F

Yes, and as such you will need to comply with your obligations under the SOGA, and your Tax and possibly VAT liabilities.

scotsbob

ferry wrote: »

wanted to ask if it's wise to register as a sole trader to do this and do the whole HMRC thing?

My experience is that once you start involving government departments two things happen.
You get involved in masses of paperwork and they try to snatch money out of your bank account.

Just saying.

AdrianC

If you're buying/selling purely for your own pleasure, because you want to own the cars, and profit is not a motive - then you're not a trader.
If you're buying/selling with the intent of making a profit, then you're trading in the course of business.

It really IS that simple. And, yes, somebody who is trading in the course of business needs to pay tax on their business profits.

A quick google finds this as a decent overview of the legal implications wrt HMRC...
http://www.brighton-accountants.com/blog/tax-self-employment-still-employed/

motorguy

scotsbob wrote: »

My experience is that once you start involving government departments two things happen.
You get involved in masses of paperwork and they try to snatch money out of your bank account.

Just saying.

Theres very little paperwork with registering or being a sole trader and you are legally obliged to do so, so its not optional.

Staying under the radar, not paying tax and avoiding your responsibilities under the SOGA (which is how many part time motor traders operate) and you're just low life scum as far as i'm concerned. You may as well just go the whole hog and start mugging people.

[Deleted User]

Yes, it would make you a trader, and you should declare your profits and pay tax.


Having said that, I once bought a car (as a second one), decided I didn't like it, I tried to sell it and couldn't because the MOT was a month away. In the end I got it MOTd (passed) then I actually sold it for more than I paid for it recovering the MOT cost, and the three months insurance payments. I probably made £50-£100 in total. Does this make me a trader? I don't think so, I bought it with the intention of it being my personal car, and insured it as such. If I happened to be able to sell if for more than I paid for it what can I do?

AdrianC

[quote=[Deleted User];65877322]Having said that, I once bought a car (as a second one), decided I didn't like it, I tried to sell it and couldn't because the MOT was a month away. In the end I got it MOTd (passed) then I actually sold it for more than I paid for it recovering the MOT cost, and the three months insurance payments. I probably made £50-£100 in total. Does this make me a trader? I don't think so, I bought it with the intention of it being my personal car, and insured it as such. If I happened to be able to sell if for more than I paid for it what can I do?[/QUOTE]
Same (well, obverse, but ykwim) situation as a lousy trader who makes a loss... It's all about whether the intention was to buy/sell for a profit, or not.

[Deleted User]

This has got me thinking, for those who need two cars, but can manage with one for a few weeks at time. Would buying and selling your second car regularly beat bangernomics for moneysaving? If I could repeat my previous success regularly, I could have practically free motoring.


You'd need to keep your eyes open for a bargain, and as soon as you buy the car, advertise it at a significantly higher price - so that you might get one or two phone calls a month from buyers, it may eventually sell a few months down the line, at which point you can start looking for your next bargain. A friend of mine advertised his car at 20% above the book price for three months, had hardly any phone calls for it, but eventually did get a buyer who only knocked 5% off the price.


The key is being patient. The risks are failing MOTs. There'll also be an admin cost every time you change your car with the insurance.


I don't think I'd want to do this myself, but wondering if there are other people who do, and if they're successful?


I did have an awesome success once when I bought a roof box on ebay that I needed for a holiday, and then sold it for more after the holiday :-)