Online selling - inform HMRC for a one off deal ?

tightauldgit

DullGreyGuy said:

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. 

As you might notice I was just going down the rabbit hole and wondering aloud but the interesting detail for me was that he didn't say he was buying it to make a profit - he was buying it so his relative would make a profit. And I just wondered to what extent that distinction mattered and if the chain would be broken if he gifted the stuff. 

Jeremy535897

tightauldgit said:

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.  

There is a very simple rule to follow. Don't claim anything you can't realistically defend. As you say, HMRC devote their ever reducing resources to the most likely areas to yield benefits. Often they lack the abilities to succeed:
https://www.taxadvisermagazine.com/article/fish-and-chip-shops-flawed-hmrc-investigation-cash-only-businesses

Shaps

Decided not to the deal in the end as  not too sure if would have been worth the hassle . The original thought was  a way of encouraging the person to get selling online and if they enjoyed it setup as a sole trader  without commiting to it beforehand but dont want to get her ( or me ) in trouble.

thanks for all the advice