HMRC ruling on eBay/ Etsy etc

soolin

Bertie129 said:

In terms of the type of eBay account I have, eBay forced me to upgrade to a business account years ago when all I was doing was selling personal items from the loft. I don't think the type of account you have with any online platform has any standing or relevance as regards your tax obligations or applicable trading laws.

As I stated above HMRC don’t influence how you are registered on various sites. However , there is a legal requirement to be properly registered and comply with the rules around declaration. 

Bertie129

the_lunatic_is_in_my_head said:

Bertie129 said:

JamTomorrow said:

I suspect our sales will exceed the HMRC criteria on both volume and value and whilst primarily made up of reselling our old items it will also include a few flips of charity shop and car boot purchases.  Can losses on reselling of old items be offset against profits on flipped items?

As a higher rate taxpayer it probably makes sense now for us to either set up a new eBay account in my Wife's name  (she is doing most of the ebay sales anyway and has no earnings so any ebay income would be nil rate band) or change the name of my account to her name to preserve the 20 years of good feedback.

I'm in the same position, I make about £4000 per year from eBay, with about half from selling on personal items and half from trading items I've bought to sell on. The approach I'm taking is this:

1. Start separating personal items from traded items by using different eBay accounts from now on.

2. Go through my eBay sales history and pull out the traded items, add up gross receipts, fees and expenses. Declare only these values on my self assessment. 

Personal items should not attract income tax so I'm excluding those from my tax return. If HMRC query it (the difference between what I declare and the figures they get from eBay) I am hoping they will accept the difference between the one-off personal items vs the traded items, which I can explain if needed.

There are some grey areas, for example any packaging materials I buy can be used for either personal or traded items, but these could legitimately be declared as a trading expense. There's no easy way I can tell what proportion is used on each!

Comments on this approach welcome if anyone has experience of it!

Personally I'd also open another current account with your bank and keep the funds separate as well. 

In terms of packaging, an example is given:

https://www.gov.uk/expenses-if-youre-self-employed

You can only claim allowable expenses for the business costs.

Example

Your mobile phone bills for the year total £200. Of this, you spend £130 on personal calls and £70 on business.

You can claim for £70 of business expenses.

Whether they would accept your method with packaging I don't know but in theory AFAIK you could sell yourself packaging, as long as it was done at market value. 

In terms of private/business account, it's not really got anything to do with the tax rules. There are requirements for business to consumer contracts regarding information provided and change of mind returns which is where this issue arises, I would imagine 95% of the business seller accounts on eBay don't meet these requirements regardless.... 

Thanks, I'm going to just try to work out a "reasonable" breakdown of costs for personal use and trading use. I'll look into using separate bank accounts going forward for my separate eBay accounts. Checking the guidance, apparently I can even claim a fraction of my mortgage costs, energy bills, council tax etc as expenses since I'm running a business from home for the equivalent of a few days per year. It all seems a little absurd.

Thankfully these figures are quite easy to come by, but I'm sure these obligations will put many small traders off entirely!

jon81uk

Bertie129 said:

In terms of the type of eBay account I have, eBay forced me to upgrade to a business account years ago when all I was doing was selling personal items from the loft. I don't think the type of account you have with any online platform has any standing or relevance as regards your tax obligations or applicable trading laws.

The type of account is relevant to trading laws, you need to show your address and accept returns if you are a business, if you have the right account that is done automatically by eBay. But thats entirely seperate to HMRC (any enforcement would be trading standards).

the_lunatic_is_in_my_head

jon81uk said:

Bertie129 said:

In terms of the type of eBay account I have, eBay forced me to upgrade to a business account years ago when all I was doing was selling personal items from the loft. I don't think the type of account you have with any online platform has any standing or relevance as regards your tax obligations or applicable trading laws.

The type of account is relevant to trading laws, you need to show your address and accept returns if you are a business, if you have the right account that is done automatically by eBay. 

Not to side-line the discussion too much, for a distance contract you also need to provide the information listed in Schedule 2 of the CCRs via a durable medium no later than the time that the goods are delivered and how many do that? 

It used to be possible as eBay allowed you to add your own text to order confirmation and dispatch emails but they took that feature away a year or two ago so your options are to print it out on paper and place it in the parcel or send your own email. 

Even for those bigger businesses that have auto emails or paperwork in the parcels I don't think I've seen many sellers fully comply with the CCRs in all my years of buying (well since the regs come in back in 2013 anyway).

Not aimed at anyone in particular, I think the whole private/business account argument stems from something other than a desire for strict compliance to the regulations. 

Bertie129

So as long as you adhere to those rules you can be fully compliant "trading" using a personal account, and you can be not fully compliant trading using a business account, and you can use a business account to sell personal items with no tax implications... The type of account is irrelevant from a legal and tax perspective, though business accounts make it easier in some ways to comply with trading laws.

soolin

Bertie129 said:

So as long as you adhere to those rules you can be fully compliant "trading" using a personal account, and you can be not fully compliant trading using a business account, and you can use a business account to sell personal items with no tax implications... The type of account is irrelevant from a legal and tax perspective, though business accounts make it easier in some ways to comply with trading laws.

The issue is a technicality , the requirement to display a full geographic address and state you are a business cannot be fulfilled with an ebay private account.

When a buyer uses a private seller (and I just looked up Body Shop again as even the reps claim to be private sellers!)  they see this message
"Registered as private seller, so consumer rights stemming from EU consumer protection law do not apply. eBay Money Back Guarantee still applies to most purchases." Legally that does not comply with how business selelrs should display customer rights.

A private seller also cannot visibly show a full geographic address without risking the ebay bot picking them up for attempting 'off ebay' sales. How many wrongly registered business sellers can you find that are using a private account and displaying a full geographic address on very listing?, to my knowledge I've never found one.

I therefore stand by my comment that for HMRC issue it makes no difference how a person is registered on ebay, but it does matter legally. 

Incidentally many private sellers, my own private accounts included, allow full change of mind returns and I have a full returns policy clearly stated - purely because that covers me to insist buyers pay for returns for non fault items. In fact my returns policy is identical on both my business and private account. 

On other more militant forums, and even sometimes on the ebay discussion boards themselves where users come across obviously wrongly registered businesses they are often told to report them for trading violations rather than to HMRC. 

Daws1985

I'm really confused by the new rules around selling second hand clothes online. So I sell a lot of my kids clothes online via vinted when they have out grown them. I don't go anywhere near the £1000 threshold but have also seen things about limits of 30 sales. Does this mean if I do 30 sales but am well below the £1000 I will need to do a self assessment??

soolin

Daws1985 said:

I'm really confused by the new rules around selling second hand clothes online. So I sell a lot of my kids clothes online via vinted when they have out grown them. I don't go anywhere near the £1000 threshold but have also seen things about limits of 30 sales. Does this mean if I do 30 sales but am well below the £1000 I will need to do a self assessment??

You really do need to read some of the posts on this and other threads.

Nothing has changed at all except that sales are now automatically being reported. There is no liability to tax on private sales.

RFW

Daws1985 said:

I'm really confused by the new rules around selling second hand clothes online. So I sell a lot of my kids clothes online via vinted when they have out grown them. I don't go anywhere near the £1000 threshold but have also seen things about limits of 30 sales. Does this mean if I do 30 sales but am well below the £1000 I will need to do a self assessment??

As above and elsewhere there are no new rules. Check out the HMRC website or Twitter account if you like and they are reinforcing the message that there are no new rules.
Selling personal items will not have a limit of either volume or sales and you will not have to inform HMRC about it. There's a small caveat about capital gains tax but that's on large amounts and really irrelevant to reselling kids' clothes.

Pollycat

I don't know if anyone has already posted this but:
eBay, Etsy, Vinted and more to share your data with HMRC (moneysavingexpert.com)