Self employed, no receipts

ruby2sday

I went self employed in September, starting an online vintage clothing store and need to register as self employed. The issue is, I've been stockpiling clothes with a mind to sell them on for years and years so I've not got the receipts for any of it. There are a few other business expenses, like a laptop I bought off a friend and transferred them money for. Obviously I'm making sure I get receipts for everything now, but what do I do about claiming the expenses I don't have records of? Can a bank statement suffice if I have nothing else?
Thanks!

Energize

If you weren't actually operating a business you can't really claim that the clothes were for business purposes.

Elle_Woods

Energize wrote: »

If you weren't actually operating a business you can't really claim that the clothes were for business purposes.

I'm not sure that is right. The OP says that she bought them with the intention of eventually selling them on. I'm self-employed and I've been advised by my accountant that I can claim business expenses for items I bought before I started business but which I now use for my work.

This link suggests that items purchased for reselling can be claimed as a business expense: https://www.gov.uk/expenses-if-youre-self-employed/reselling-goods

You don't have to submit proof of your expenses with your tax return but if HMRC come back to you and ask for proof you need to have it. I'm not sure if bank statements are enough but hopefully someone else will be along to help.

Any accountants out there?

trailingspouse

I agree - when we set up our business (limited company) we were able to sell some things to the company - desks we already owned, a PC, printer, etc.

But I don't know if that can still be done if you're not a limited company, and I don't know if applies to stock.

Sorry - not a terribly helpful answer really...

motorguy

ruby2sday wrote: »

I went self employed in September, starting an online vintage clothing store and need to register as self employed. The issue is, I've been stockpiling clothes with a mind to sell them on for years and years so I've not got the receipts for any of it. There are a few other business expenses, like a laptop I bought off a friend and transferred them money for. Obviously I'm making sure I get receipts for everything now, but what do I do about claiming the expenses I don't have records of? Can a bank statement suffice if I have nothing else?
Thanks!

You could "sell" them to your business as a bulk lot for a specific amount, and thus generate a receipt from your business to you?

Energize

Elle_Woods wrote: »

I'm not sure that is right. The OP says that she bought them with the intention of eventually selling them on. I'm self-employed and I've been advised by my accountant that I can claim business expenses for items I bought before I started business but which I now use for my work.

This link suggests that items purchased for reselling can be claimed as a business expense: https://www.gov.uk/expenses-if-youre-self-employed/reselling-goods

You don't have to submit proof of your expenses with your tax return but if HMRC come back to you and ask for proof you need to have it. I'm not sure if bank statements are enough but hopefully someone else will be along to help.

Any accountants out there?

Yes you can in principle claim for things you bought before you started trading, but in this situation where someone has been accumulating clothes over a period of years with the speculation of eventually selling them I wouldn't fancy the OPs chances of convincing the tax office.

If she sells them as personal items and not part of a business she wouldn't be liable for tax on the sale AFAIK.

jobbingmusician

I don't know the answer to this question, but I do know that HMRC SE department pride themselves on being helpful. Just ring them and ask! (But don't do this until after 1st February - all HMRC are manic at the moment because they are being pestered by people rushing to get their online returns in before 31st Jan. YOUR (online) return isn't due until 31st Jan 2019, so you have plenty of time.)

ruby2sday

Thanks. So if instead of claiming them as expenses, I treat them as personal items, then how do I prove that I shouldn't pay tax on that profit?

motorguy

ruby2sday wrote: »

Thanks. So if instead of claiming them as expenses, I treat them as personal items, then how do I prove that I shouldn't pay tax on that profit?

You told us you bought them to resell for profit, therefore you would need to be paying tax on that profit.

IF, however you wish to view those as your own personal items, then if you happen to sell them for more than you paid for them then that is neither here nor there - HOWEVER keep that selling very separate from your business.

Personally, i'd speak to an accountant. I suspect HMRC may not be totally objective...

ruby2sday

Also I have some old designer clothes of my grandma's that I want to sell but again, if they count as personal items I've no idea how to go about proving I don't need to be taxed on those profits

Energize

If its a personal sale then you won't be declaring it on your tax return so hmrc won't know about it. Unless we're talking over £10k of stuff it's not going to show up on any radar.