Question about proving cost to taxman for car boot items

HappyChappy_2

Hi all,

Sorry I'm not too sure which section this would be best in?

I will be leaving my job in December to start my own online business in January.
My partner has a good job and I have the opportunity now the mortgage is paid to try and do what I love to make a living. I have dabbled on ebay for a few years and although do not list and sell much currently, I can always make good money from my items so think with enough time to concentrate on it I could do well.

My question is - Lots of the items I buy/use are from antique fairs and car boot sales. How would I prove to the tax man the cost of these items as receipts are not really an option.
Would it be sufficient to record the cost/date/location of the purchase?
I have search for an answer to this but cannot seem to find anything?

Any help much appreciated

RFW

HappyChappy wrote: »

My question is - Lots of the items I buy/use are from antique fairs and car boot sales. How would I prove to the tax man the cost of these items as receipts are not really an option.
Would it be sufficient to record the cost/date/location of the purchase?
I have search for an answer to this but cannot seem to find anything?

They could insist you had receipts but not much they can do if you don't and they rarely check any small sellers beyond those who don't declare anything.
For clarity, give HMRC a call and ask what you need to do. They often run free workshops with guides to record keeping and other information for start ups.

HappyChappy_2

thank you RFW

I look on their site and saw they had a helpline but I was not sure what questions would be asked etc as I am not planning on starting this until January. I am however starting to buy items at fairs/boot sales at the moment to build my stock up.

I will give them a call and see what they say. thanks again

soolin

When I first started out aeons ago and phoned to register with HMRC they gave me a business manager, I spoke to him a few times although I declined the offers of a day workshop . At the time I was intending to buy at all sorts of places, including car boots and he told me all I could do is keep a note of where I when I bought something, and how much I paid . I have always kept my books on paper, I started that way and never really got out of the habit, so all I do is record the brief details in my book.

So far I have never been audited, but I dread ever being chosen as I have paperwork stashed everywhere as buying small lots on a constant basis results in lots of bits of odd paper.

HappyMJ

Technically if you don't have a receipt you can't claim the expense but as you say this is unreasonable when buying from people who are just selling their own second hand goods and are not running a business and therefore don't have a receipt book or a business card. You can keep your own records in that case. Just be reasonable and you should be OK.

Me personally, in my tax minimization thoughts, rather than putting the items into storage I'd use the goods by displaying them in my lounge/dining room for a few months (I'd take some family photos with these items in the background in case HMRC don't believe you) then you would just be selling your own second hand goods. If you happen to sell them at a profit there isn't any tax to pay.

edit: no income tax to pay....there would still be capital gains tax to pay on the sale of antiques.

martindow

HappyMJ wrote: »

Me personally, in my tax minimization thoughts, rather than putting the items into storage I'd use the goods by displaying them in my lounge/dining room for a few months (I'd take some family photos with these items in the background in case HMRC don't believe you) then you would just be selling your own second hand goods. If you happen to sell them at a profit there isn't any tax to pay.

edit: no income tax to pay....there would still be capital gains tax to pay on the sale of antiques.

I wouldn't care to argue this with HMRC. Storing things on your mantle piece for a few weeks rather than in cardboard boxes doesn't alter the fact they have been bought with a view to selling on at a profit which is the criterion used.

If this worked John Lewis would have 'living rooms' full of TVs and Marks and Spencer clothes rails in 'bedrooms' which you could buy tax free.

HappyMJ

Antiques are a special case. Speak to the HMRC.

campdave

HappyMJ wrote: »

Technically if you don't have a receipt you can't claim the expense but as you say this is unreasonable when buying from people who are just selling their own second hand goods and are not running a business and therefore don't have a receipt book or a business card. You can keep your own records in that case. Just be reasonable and you should be OK.

Me personally, in my tax minimization thoughts, rather than putting the items into storage I'd use the goods by displaying them in my lounge/dining room for a few months (I'd take some family photos with these items in the background in case HMRC don't believe you) then you would just be selling your own second hand goods. If you happen to sell them at a profit there isn't any tax to pay.

edit: no income tax to pay....there would still be capital gains tax to pay on the sale of antiques.

This is a prime example of why it's always better to seek proper professional advice rather than ask on the internet.

HappyChappy_2

Thank you all for your replies.

I would feel uneasy about not declaring my income and will speak with them to see what they say.

Like Soolin, i have stated to just keep records of what I have bought, where, price etc and would hope that this would be okay because we are not talking about big money items or large amount of profit per sale.

I just want to be doing what I love while in a position to at least try and see how it goes. I am more than happy to pay the tax on everything I earn and want to be legit.

I will let you know what they say.

HappyChappy_2

I just called the HMRC helpline and was put through to a self employment specialist.

I was informed that I would just need to keep receipts wherever possible the best idea would be to carry around a little booklet and ask each seller to sign it.
I asked what information would be required and was told just the date, amount, description of the item and a signature.
I explained that this may be difficult at a busy fair or boot sale and also asked how they would view this if I was ever audited. I was told that each case is individual and they would discuss that with me if it ever happened.

He said about tickets on items can also be kept but that is stupid as yesterday I bought an item that has the ticket on it. The ticket was £55 but I paid £28. This will work in my favour but then I could just make my own price labels and keep them.

I guess there is no real answer to this then!I will do as instructed and at antique fairs I'm sure they will be happy to do this. A lady on her own trying to control her stall at a boot sale at 6am with people throwing money at her and bartering things down, maybe not so easy!

goodfella66

I buy from car-boots to resell. I went on a tax seminar and got told as long as I keep a record of what I brought and how much I paid for each individual item that would be sufficient.

I have a spreadsheet that I keep for this information and I even file everything under each individual date. At the end of the tax year, I save that spreadsheet separately and start a new one for the new tax year.

Also bear in mind, at the end of each tax year you have to have a stock in hand figure as you can only claim the purchase price for items that have been sold.