received letter from tax compliance check

littlelady

I have a stall occasionally at vintage sales where i buy and sell items at weekends when i am free.

I normally cover my cost of my stall and make a little extra to buy a few more items from a carboot etc.

I enjoy doing it and it has grown from a hobby and a real interest for me which gets me out of the house having suffered with deep depression in the past.

I have received a letter from HM revenue saying they are opening a compliance check and suggest i am self employed.

They want me to forward details i commenced self employment.
Income i made ,copies of bank statements etc.

Do i have to go to an accountant ? I basically just cover my costs regards these fairs.
When factored in the cost of a stall ,travel,goods i didnt think i needed to be self employed.


I have not a clue where to start and concerned regards the deadline they have given me.

Any advice would be grateful please i want to sort this out but worried about the date they have given all information.

Pennywise

Unfortunately you are self employed and should have been preparing accounts and tax returns ever since you made your first sale. The trigger is buying something with the sole intention of selling it. If you'd have only been selling surplus personal stuff (toys, clothing etc that you'd used yourself and selling), then you'd have been OK.

You need to prepare "accounts". At this stage, they can be simply a full list of your incomings (sales) and a full list of your expenses (purchases, stall rents, etc). When you have a list, break it down into tax years, i.e. each 5 April, and then it will show the surplus/deficit. You should then give those totals to to HMRC. Whether you need an accountant, only you can decide. But even if you do, you'll still have to provide the lists of in's and out's. Hopefully, you can show you made no profit and then it may all go away and maybe HMRC will even let you off from preparing and submitting the tax returns if they can see there's nothing in it.

Nearlyold

You don't need to go to an accountant though it maybe advisable if you are not used to dealing with accounts. Do you have the necessary records the HMRC are asking for ie details of income and expenditure for the "business"? How long a period are we talking about?

littlelady

thankyou pennywise and nearlyold,they have suggested the last two years,have never done accounts before so have no idea.

chrismac1

The single most important thing is to have convincing takings records. The reason for this is that it is not unknown - far from it - for HMRC to just lob an extra £50k of supposed takings into the mix, so £10k of tax plus some extra NI and here is the bill, please pay.

So as you put together your numbers bear that in mind. As an example of how not to do it, if your mileage records suggest you go to one of these once a week, but your takings records indicate one a month, you have a problem.

If you don't keep a till at these venues or issue receipts, think of some other way for coming up with some sort of supporting evidence that the takings you are putting down for HMRC are a complete record.

You have my sympathies here. If we take your post at face value then HMRC are just wasting valuable taxpayers' resources going after you. But see my other posts on this subject, in my experience they are a bunch of clueless blunderers who go after what they perceive to be easy marks. The problem is that because they are so cluless they end up with diddly squat out of a lot of these, they are a really amateurish operation in 2016 compared to what they were in, say, 1996.

laticsforlife

"it is not unknown - far from it - for HMRC to just lob an extra £50k of supposed takings into the mix"

Nice bit of scaremongering for the OP there!

HMRC don't just 'lob-in' £50k, unless you needed £50k to live on and didn't have the income to support the lifestyle.

And before bemoaning about the quality of HMRC investigations, maybe take a look at 5+ years of pay cuts (in real terms), a massive reduction in pension rights (ask any accountant and they'll tell you that was the only reason many Tax Inspectors stayed with HMRC), 200+ office closures, 20,000+ staff lost, and THEN ask yourself why HMRC might go for 'easy marks'.

Risk assess 100 cases, and take on the top 10, that's not taking easy marks, that using what scant resources you have to pursue the perceived best cases.

If what the OP is saying is that they don't make any profit, then it is perhaps someone has used a whistle-blower line and 'dobbed' them in.

Don't start doing accounts, just provide evidence of the income and tell them in plain English how much it cots you to earn that money. Tell them also about things that aren't easily quantifiable, like that you travel 10 miles to each market etc.

Don't whatever you do, ignore the request; work with them and they will work with you. If you owe a small amount of tax (on a small profit) then that's not going to bankrupt you.

chrismac1

Do I really have to start posting up links to the tax cases where HMRC have just made up any old drivel and assessed a big tax bill on it?

Because if I have to then I will.

chrismac1

I didn't mean that one. There was one involving a takeaway in London where the sales assessed by HMRC would have required something like 10 staff working in shifts 16 hours per day 7 days per week in order to achieve them.

Whereas the business in fact had 4 or 5 staff working shifts 10 or 12 hours per day with one day closed per week.

There are numerous cases like that one. As I said, made up drivel.

polymaff

littlelady wrote: »

I have received a letter from HM revenue saying they are opening a compliance check and suggest i am self employed. They want me to forward details i commenced self employment. Income i made ,copies of bank statements etc.

Do i have to go to an accountant ? I basically just cover my costs regards these fairs..

The hardest task you probably face is collecting the data - and you'd still have this task even if you used an accountant.

So,

1. Did you record each sale, record the total sales of each event or deposit the total in one transaction at a bank/building society?

2. Did you record each purchase of items of goods for resale - individually or as a collection purchased - and is there any way you can prove that you paid a traceable party for them?

I'd take care about declaring further expenses - unless they've got impeccable traceability. You don't want to end up hanging yourself for the odd pound or two.

https://www.gov.uk/working-for-yourself/what-counts-as-self-employed