Tax implications and Ebay

soolin

martindow said:

soolin said:

A business is a business even if it makes a loss. 

Is it though if it is never going to turn a profit?  I remember seeing something from HMRC referring to hobby businesses, albeit some twenty years ago.

As an example they talked of an artist who occasionally sold paintings but his expenditure on materials was always going to exceed the sales income.  They specifically said that as such, the 'business' was not profit-making and was never likely to be so they did not want to receive tax returns.

The OP seems to be similar unless they have aspirations to make profits in the future.  Of course HMRC may have changed their attitude over decades!

I was actually working as an accountant many years ago and a business was always a business. Yes wording changes as does understanding but if someone charges for their work, even if it is only to cover costs or they hope to eventually start to make more than they spend (even if they don't achieve that) then it is a business. It is more likely that the artist was told to stay under the radar as they were so bad they were never going to make money - and to keep any cash in hand they receive for supplies quiet. As I said above though if this truly is a hobby and OP never intends to make money and actively goes out of their way to do so and they can demonstrate them to HMRCs satisfaction then that's different. 

For a while I had a number of clients who were jobbing actors , trying desperately for bit parts virtually all (apart from a couple who got into the soaps) none showed a profit. However they all had the intention to make money and so needed accounts prepared. 

RFW

martindow said:

soolin said:

A business is a business even if it makes a loss. 

Is it though if it is never going to turn a profit? 

If you're on a low level of buying and selling (eg spending a tenner a month in a pound shop) then HMRC probably won't care if you earn a tenner or lose a tenner.
On the other hand, as an extreme example, Amazon never made a profit for the first ten years of trading, I doubt anyone would consider it a hobby business.
It could be that having a hobby business that loses money is an advantage for tax purposes. Losses could be set aside against other taxable income so it could be worth declaring it, even if it isn't necessary to do so.

martindow

RFW said:

It could be that having a hobby business that loses money is an advantage for tax purposes. Losses could be set aside against other taxable income so it could be worth declaring it, even if it isn't necessary to do so.

I assumed that was the thinking.  HMRC really don't want people with hobbies declaring them as businesses in order to have more expenses than receipts year after year and setting that off to reduce PAYE tax.