Online selling - inform HMRC for a one off deal ?

Shaps

A friend is closing his toy shop and offered me old the stock at half cost .

I was thinking of buying the items on behalf of a family member who is currently not working ( housewife ) for her to sell on ebay / facebook but not too sure of the tax implications -  I have read you are allowed to sell upto £1000 without informing the HRMC but it is not too clear if that is items you own or bought to sell for profit.

If she sold the lot it would not be a massive amount of profit at possibly £1k (but better than nothing) but would help with shopping / bills .

They are small ticket items between 10 - £30 and would most likely be a one off deal but she may enjoy do it and take it further if it works out .

Her husband works and the only benefit they receive is for their two children . 

Would she need to inform the HRMC or  register as a sole trader as it is early days and not 100% they will make money.

thanks 

Jeremy535897

If you sell items that you bought for your own use originally, that is not a trade, and unless you sell a chattel for over £6,000 there can be no tax due.

If you buy and sell items with a view to profit, you must register as self employed if you sell over £1,000 a year (sales, not profit). See:https://www.gov.uk/register-for-self-assessment/self-employed

Savvy_Sue

Also where would she keep the stock? If at home, she needs to check with her insurer. 

DullGreyGuy

The £1,000 is annual revenue, not profit.

Its not clear what you are proposing... what is the total value of the goods you are considering buying (value being what you will be paying for them, not what you may sell them for or anything else)?

Is she or you buying them? Are you just offering her interest free finance for her to buy them? If you are buying them then how will she buy them off you? Will you make any margin on the sales?

tightauldgit

Jeremy535897 said:

If you sell items that you bought for your own use originally, that is not a trade, and unless you sell a chattel for over £6,000 there can be no tax due.

If you buy and sell items with a view to profit, you must register as self employed if you sell over £1,000 a year (sales, not profit). See:https://www.gov.uk/register-for-self-assessment/self-employed

Would i be right in thinking that if OP buys the items and gifts them to family member X then from the family member's point of view they would be operating in the former - i.e. selling their own items rather than operating as a business? 

If Family Member X was to gift OP half the profits at some point later would that also be OK? 

Seems like a fiddle I know but not quite sure how HMRC draw the line on these types of things. I'm sure there's loads of these little off the books deals happening all the time. 

Jeremy535897

It is all to do with the profit motive. If I buy a tea set because I like it, and a few years later I sell it because I don't drink tea any more, that is not a trade. If I buy 20 tea sets to sell, that is a trade. If I route the purchases through a third party, as opposed to just receiving a gift (clearly evidenced if there is some sort of a payment back), it is a trade. If there is a stream of purchases by X, who gives them to Y without any expectation of repayment, and Y sells them and keeps the proceeds, perhaps there is not a trade, although there would be a gift for inheritance tax purposes (which may or may not be exempt).

DullGreyGuy

tightauldgit said:

Jeremy535897 said:

If you sell items that you bought for your own use originally, that is not a trade, and unless you sell a chattel for over £6,000 there can be no tax due.

If you buy and sell items with a view to profit, you must register as self employed if you sell over £1,000 a year (sales, not profit). See:https://www.gov.uk/register-for-self-assessment/self-employed

Would i be right in thinking that if OP buys the items and gifts them to family member X then from the family member's point of view they would be operating in the former - i.e. selling their own items rather than operating as a business? 

If Family Member X was to gift OP half the profits at some point later would that also be OK? 

Seems like a fiddle I know but not quite sure how HMRC draw the line on these types of things. I'm sure there's loads of these little off the books deals happening all the time. 

All sole traders are selling their own items (as all businesses do too) because they buy items as stock and then sell them on with markup (hopefully enough to cover their running costs)

The key is the intent... are they doing this as part of a way to make money or are they just liquidating their own possessions. The fact the stock may be gifted doesnt change anything, a stall in our local craft market was full of found object compositions... they arent buying them (if you believe their story) but its still a business because they are selling them for profit.

tightauldgit

DullGreyGuy said:

tightauldgit said:

Jeremy535897 said:

If you sell items that you bought for your own use originally, that is not a trade, and unless you sell a chattel for over £6,000 there can be no tax due.

If you buy and sell items with a view to profit, you must register as self employed if you sell over £1,000 a year (sales, not profit). See:https://www.gov.uk/register-for-self-assessment/self-employed

Would i be right in thinking that if OP buys the items and gifts them to family member X then from the family member's point of view they would be operating in the former - i.e. selling their own items rather than operating as a business? 

If Family Member X was to gift OP half the profits at some point later would that also be OK? 

Seems like a fiddle I know but not quite sure how HMRC draw the line on these types of things. I'm sure there's loads of these little off the books deals happening all the time. 

All sole traders are selling their own items (as all businesses do too) because they buy items as stock and then sell them on with markup (hopefully enough to cover their running costs)

The key is the intent... are they doing this as part of a way to make money or are they just liquidating their own possessions. The fact the stock may be gifted doesnt change anything, a stall in our local craft market was full of found object compositions... they arent buying them (if you believe their story) but its still a business because they are selling them for profit.

Very hard to prove intent though - I sell a lot of my own stuff on ebay and often make a profit on it but wouldn't and don't class that as a business. I didn't buy the stuff with the intention to sell it, but I am certainly selling it with the intention of making a profit now that I know what it's worth. 

On the other hand if I was going out and buying stuff from a wholesaler and then listing it on ebay then it fairly obviously would be. 

If someone was to hand me a few boxes full of toys and say 'see what you can make selling these on Ebay' then I think that's a meaningfully different situation than someone saying 'I'll sell you these toys for £500 and you can probably sell them for a grand' 

The artworks are a bit different because they're obviously doing the work with the intention to sell the finished products. 

Equally if I flog my unwanted Xmas presents on Ebay that's not a business, so what's the difference in selling an unwanted gift of several boxes of toys? 

The only real differentiator i can think of is scale/regularity - if it's an ongoing thing then that would suggest its a business. 

DullGreyGuy

tightauldgit said:

DullGreyGuy said:

tightauldgit said:

Jeremy535897 said:

If you sell items that you bought for your own use originally, that is not a trade, and unless you sell a chattel for over £6,000 there can be no tax due.

If you buy and sell items with a view to profit, you must register as self employed if you sell over £1,000 a year (sales, not profit). See:https://www.gov.uk/register-for-self-assessment/self-employed

Would i be right in thinking that if OP buys the items and gifts them to family member X then from the family member's point of view they would be operating in the former - i.e. selling their own items rather than operating as a business? 

If Family Member X was to gift OP half the profits at some point later would that also be OK? 

Seems like a fiddle I know but not quite sure how HMRC draw the line on these types of things. I'm sure there's loads of these little off the books deals happening all the time. 

All sole traders are selling their own items (as all businesses do too) because they buy items as stock and then sell them on with markup (hopefully enough to cover their running costs)

The key is the intent... are they doing this as part of a way to make money or are they just liquidating their own possessions. The fact the stock may be gifted doesnt change anything, a stall in our local craft market was full of found object compositions... they arent buying them (if you believe their story) but its still a business because they are selling them for profit.

Very hard to prove intent though - I sell a lot of my own stuff on ebay and often make a profit on it but wouldn't and don't class that as a business. I didn't buy the stuff with the intention to sell it, but I am certainly selling it with the intention of making a profit now that I know what it's worth. 

On the other hand if I was going out and buying stuff from a wholesaler and then listing it on ebay then it fairly obviously would be. 

If someone was to hand me a few boxes full of toys and say 'see what you can make selling these on Ebay' then I think that's a meaningfully different situation than someone saying 'I'll sell you these toys for £500 and you can probably sell them for a grand' 

The artworks are a bit different because they're obviously doing the work with the intention to sell the finished products. 

Equally if I flog my unwanted Xmas presents on Ebay that's not a business, so what's the difference in selling an unwanted gift of several boxes of toys? 

The only real differentiator i can think of is scale/regularity - if it's an ongoing thing then that would suggest its a business. 

It depends if we are talking about what you morally should do or what you can probably get away with.

A chap I know, his wife and his 2 kids are the "shareholders" of a company that he and his wife operate as contractors. Each year they go on to Dubai 1st class, stay at a 5* hotel for a week and put the £40,000 through on their accounts as their annual AGM. Is it a family holiday or an AGM? Is £40,000 proportionate for an AGM on a company with £500k turnover? He's done it for 20 years but doesn't mean its right.

The OP has clearly stated they are doing it not so their family member has some toys for Xmas but explicitly buying stock from a liquidating company to be sold on at a profit. Selling them therefore is a for profit activity. 

Again, having an engagement ring for 20 years and then selling it on eBay after you found your wife/husband has been cheating on you and happening to make a profit is not the same as having gone to a thrift store to buy an item to immediately sell on eBay.

Jeremy535897

DullGreyGuy said:

tightauldgit said:

DullGreyGuy said:

tightauldgit said:

Jeremy535897 said:

If you sell items that you bought for your own use originally, that is not a trade, and unless you sell a chattel for over £6,000 there can be no tax due.

If you buy and sell items with a view to profit, you must register as self employed if you sell over £1,000 a year (sales, not profit). See:https://www.gov.uk/register-for-self-assessment/self-employed

Would i be right in thinking that if OP buys the items and gifts them to family member X then from the family member's point of view they would be operating in the former - i.e. selling their own items rather than operating as a business? 

If Family Member X was to gift OP half the profits at some point later would that also be OK? 

Seems like a fiddle I know but not quite sure how HMRC draw the line on these types of things. I'm sure there's loads of these little off the books deals happening all the time. 

All sole traders are selling their own items (as all businesses do too) because they buy items as stock and then sell them on with markup (hopefully enough to cover their running costs)

The key is the intent... are they doing this as part of a way to make money or are they just liquidating their own possessions. The fact the stock may be gifted doesnt change anything, a stall in our local craft market was full of found object compositions... they arent buying them (if you believe their story) but its still a business because they are selling them for profit.

Very hard to prove intent though - I sell a lot of my own stuff on ebay and often make a profit on it but wouldn't and don't class that as a business. I didn't buy the stuff with the intention to sell it, but I am certainly selling it with the intention of making a profit now that I know what it's worth. 

On the other hand if I was going out and buying stuff from a wholesaler and then listing it on ebay then it fairly obviously would be. 

If someone was to hand me a few boxes full of toys and say 'see what you can make selling these on Ebay' then I think that's a meaningfully different situation than someone saying 'I'll sell you these toys for £500 and you can probably sell them for a grand' 

The artworks are a bit different because they're obviously doing the work with the intention to sell the finished products. 

Equally if I flog my unwanted Xmas presents on Ebay that's not a business, so what's the difference in selling an unwanted gift of several boxes of toys? 

The only real differentiator i can think of is scale/regularity - if it's an ongoing thing then that would suggest its a business. 

It depends if we are talking about what you morally should do or what you can probably get away with.

A chap I know, his wife and his 2 kids are the "shareholders" of a company that he and his wife operate as contractors. Each year they go on to Dubai 1st class, stay at a 5* hotel for a week and put the £40,000 through on their accounts as their annual AGM. Is it a family holiday or an AGM? Is £40,000 proportionate for an AGM on a company with £500k turnover? He's done it for 20 years but doesn't mean its right.

The OP has clearly stated they are doing it not so their family member has some toys for Xmas but explicitly buying stock from a liquidating company to be sold on at a profit. Selling them therefore is a for profit activity. 

Again, having an engagement ring for 20 years and then selling it on eBay after you found your wife/husband has been cheating on you and happening to make a profit is not the same as having gone to a thrift store to buy an item to immediately sell on eBay.

Unless the contracting business had customers in Dubai and there were meetings with them, I suspect that if HMRC looked at it, they would deny a deduction for the AGM you refer to on the grounds that it is not wholly and exclusively incurred for the purposes of the trade, and there would be very little prospect of a successful challenge. 

tightauldgit

Jeremy535897 said:

DullGreyGuy said:

tightauldgit said:

DullGreyGuy said:

tightauldgit said:

Jeremy535897 said:

If you sell items that you bought for your own use originally, that is not a trade, and unless you sell a chattel for over £6,000 there can be no tax due.

If you buy and sell items with a view to profit, you must register as self employed if you sell over £1,000 a year (sales, not profit). See:https://www.gov.uk/register-for-self-assessment/self-employed

Would i be right in thinking that if OP buys the items and gifts them to family member X then from the family member's point of view they would be operating in the former - i.e. selling their own items rather than operating as a business? 

If Family Member X was to gift OP half the profits at some point later would that also be OK? 

Seems like a fiddle I know but not quite sure how HMRC draw the line on these types of things. I'm sure there's loads of these little off the books deals happening all the time. 

All sole traders are selling their own items (as all businesses do too) because they buy items as stock and then sell them on with markup (hopefully enough to cover their running costs)

The key is the intent... are they doing this as part of a way to make money or are they just liquidating their own possessions. The fact the stock may be gifted doesnt change anything, a stall in our local craft market was full of found object compositions... they arent buying them (if you believe their story) but its still a business because they are selling them for profit.

Very hard to prove intent though - I sell a lot of my own stuff on ebay and often make a profit on it but wouldn't and don't class that as a business. I didn't buy the stuff with the intention to sell it, but I am certainly selling it with the intention of making a profit now that I know what it's worth. 

On the other hand if I was going out and buying stuff from a wholesaler and then listing it on ebay then it fairly obviously would be. 

If someone was to hand me a few boxes full of toys and say 'see what you can make selling these on Ebay' then I think that's a meaningfully different situation than someone saying 'I'll sell you these toys for £500 and you can probably sell them for a grand' 

The artworks are a bit different because they're obviously doing the work with the intention to sell the finished products. 

Equally if I flog my unwanted Xmas presents on Ebay that's not a business, so what's the difference in selling an unwanted gift of several boxes of toys? 

The only real differentiator i can think of is scale/regularity - if it's an ongoing thing then that would suggest its a business. 

It depends if we are talking about what you morally should do or what you can probably get away with.

A chap I know, his wife and his 2 kids are the "shareholders" of a company that he and his wife operate as contractors. Each year they go on to Dubai 1st class, stay at a 5* hotel for a week and put the £40,000 through on their accounts as their annual AGM. Is it a family holiday or an AGM? Is £40,000 proportionate for an AGM on a company with £500k turnover? He's done it for 20 years but doesn't mean its right.

The OP has clearly stated they are doing it not so their family member has some toys for Xmas but explicitly buying stock from a liquidating company to be sold on at a profit. Selling them therefore is a for profit activity. 

Again, having an engagement ring for 20 years and then selling it on eBay after you found your wife/husband has been cheating on you and happening to make a profit is not the same as having gone to a thrift store to buy an item to immediately sell on eBay.

Unless the contracting business had customers in Dubai and there were meetings with them, I suspect that if HMRC looked at it, they would deny a deduction for the AGM you refer to on the grounds that it is not wholly and exclusively incurred for the purposes of the trade, and there would be very little prospect of a successful challenge. 

I do suspect that a lot of the 'getting away with things' cases are simply that HMRC have never checked - they can't have the resources to look into more than a tiny percentage of business returns and imagine the majority is focused on the biggest potential returns rather than Mr Chancer PLC knocking 10 grand off his tax bill with some creative expenses.

The only thing that stops me doing it is the knowledge that Sod's Law applies and I'd be the first man thrown in jail for wrongly claiming a first class stamp that I sent a birthday card with.