hobby or business?

redstarbelgrade

Savvy_Sue wrote: »

It's a fairly standard clause in a tenancy agreement. With a social landlord, permission can be sought and shouldn't be unreasonably refused, unless the business is going to impact on the neighbours. Which painting at the kitchen table probably isn't. If you were going to have potential buyers visit your 'studio' on a regular basis, or give up work and have weekly deliveries of canvases and paints, it might.

With a private let and / or a mortgage it can be more complicated, sometimes it's a clause in the mortgage agreement, and if you're renting privately the landlord may not want the hassle of seeking permission, and it may be refused anyway.

I own my home and the mortgage is paid off. If I were to put the house on the market I wouldn't expect it to sell very quickly, so I'd be looking at a long wait.
If I started looking at other properties, would an estate agent even know whether the houses on their books had a similar covenant?

Savvy_Sue

redstarbelgrade wrote: »

I own my home and the mortgage is paid off. If I were to put the house on the market I wouldn't expect it to sell very quickly, so I'd be looking at a long wait.
If I started looking at other properties, would an estate agent even know whether the houses on their books had a similar covenant?

It's something your solicitor would establish, hopefully at an early stage in the pre-contract enquiries. An estate agent MIGHT know, eg particular estates sometimes have such covenants, as yours does, so it might depend on how many sales have happened in that area.

Having just re-read your earlier post about the management company clamping down, it's worth saying that not all such covenants are enforceable / likely to be enforced. In your case, there's an active management company. In the case of my late parents' house, there was a parking and garage area at the rear of the houses. I don't particularly remember any covenants relating to it, but certainly when my parents bought the house the company who'd originally owned that land no longer existed and nor did the company who'd succeeded them. The parking area is badly damaged and pot-holed, but whose responsibility it is to repair it is a question ... so if there had been a covenant, there was no-one likely to enforce it.

Savvy_Sue

Of course another question is: what is the management company clamping down on? What are they able / likely to find out about?

Someone repairing cars on the front lawn or offering massage services is clearly going to create more footfall. Someone offering a virtual PA service is going to create none - so who would know?

Mistral001

If you are trading under your own name and always receiving business correspondence that way, will you be evicted? On the other hand if you call your business "The Redstarbelgrade Gallery" or "Redstarbelgrade Enterprises" or something like that then you would probably come to the attention of the landlord.


The question of the PO Box No. is one that is a grey area. I would not go by what the virtual address companies say on the legal situation including Royal Mail itself as they have an interest in selling you one. Do not go by claims that it gives you a more "professional" image. Many businesses and people will not do any business with someone who uses a virtual or PO Box address.

Percy1983

On the original question.


I business is something you are doing while trying to make a profit (you may not succeed at first).


A hobby is something you do for fun, which you may end up selling a few things to cover materials etc.

As for working form home, in most cases if its not outside the realms of normal activities its usually fine, ie, a bit of admin and such, of course its down to each agreement etc.

00ec25

Percy1983 wrote: »

On the original question.

the answer to which is covered by the badges of trade as applied by HMRC

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim20205

OP is intending to trade...

JimmyTheWig

redstarbelgrade wrote: »

I do complete a self-employed tax return as I was advised some years ago that I should (and of course it's the right thing to do), but my turnover is always zero as my allowable expenses always exceed any sales I make.

Off topic to the original question, but do you know that "turnover" is the equivalent of "total sales" and isn't affected by expenses. You have a non-zero turnover, but a zero profit.

JimmyTheWig

redstarbelgrade wrote: »

If I started looking at other properties, would an estate agent even know whether the houses on their books had a similar covenant?

The owners should know.
If you make it clear from the start that you aren't interested in the property if it has such a restriction then it's not in the sellers interests to lie about it as your solicitor will find out for you at some point.

JimmyTheWig

redstarbelgrade wrote: »

There's a restrictive covenant on all properties on the estate, and although a number of 'businesses' have operated in recent years the management company have announced that they're clamping down on it. Unlike some, what I do involves no traffic, noise or disruption to anybody, but of course that isn't the definition of 'running a business from home'.

It sounds to me like you are running a business.
I'm not normally one for breaking the rules, but I don't see what harm you'd be doing. You're not turning your house into business premises - it will still be mainly used as your home. You're not going to have (many?) customers coming to the house.
You're not really going to have any impact on anyone over and above the impact you would have by carrying out your hobby.

So if it's a hobby that is technically defined as a business, I'd say just do it.
Because I believe that all the clamping down would mean is "cease and desist" - i.e. you'd have to stop trading. If it's only a hobby then you're no worse off if this happens 12 months down the line than if you hadn't traded in the first place.
Obviously if it is a business for the sake of making money - i.e. you are investing a significant amount in your website, etc, with a view to making a profit - then you would hit problems if you got shut down and so if this is the case then probably best to stick to the rules.