Making loss on item

Pkman

What is the rule on making a loss on ebay? 

For example I bought 2 phone on amazon and sell on ebay. 

Paid £100, I sold for £150, I need to pay 20% of the profit.

The 2nd phone I paid £100, I can sell it for £150, but decided to sell to my friend for £90. Making a £10 loss.

So can I say I only make £40 profit??? Is this 'legal' in term of tax situation? 

Would it be more 'legit' if I do a listing for my friend to purchase so it is on my ebay p+l? 

(I am aware of the allowance, this Q is just purely for example above) 

Miser1964

If you are a trader, then you can offsets costs and losses in tax return. 

RedImp_2

There’s probably something in the rules about deliberately selling at a loss to friends and family to offset taxable profits but can’t see that anyone would be able to check 

RFW

RedImp_2 said:

There’s probably something in the rules about deliberately selling at a loss to friends and family to offset taxable profits but can’t see that anyone would be able to check 

Unless it's a deliberate fiddle, ie you put down you sold something to a friend for £90 and really sold it to a stranger for £200, then I can't see why anyone would care who you sold what to. There certainly isn't a rule about it.

I'd say the OP needs some help/advice. It really isn't a matter of buying something in one place and selling in another and the difference between the two is profit or loss. There's a fair bit more to profit and loss. As far as selling goes, you don't have to sell it on Ebay. Just make a receipt for the friend and keep hold of it. Also note how they paid you.

Grumpy_chap

This is a confusing situation.
Not long ago, the OP was asking about how to buy on Amazon to sell on eBay for a profit:
https://forums.moneysavingexpert.com/discussion/6494890/what-are-the-potential-risk#latest

Now, the OP has purchased two phones, made a loss on one by selling to a friend at below cost and off-setting against the profit on the second phone.

I would actually view the transactions differently to how the OP has viewed them:

1. Bought phone (1) for £100
2. Sold phone (1) for £150 (making profit of £50)
3. Bought phone (2) for £100
4. Gifted the friend £10 - personal transaction nothing to do with trading
5. Sold phone (2) to to the friend for £100 (cost price) (thus making no profit on this sale)
6. Profit against the two phones (1) & (2) is £50

It always seems worth running the test, if you were in front of a judge, could you explain the action taken as a benefit to the trading business?  It is hard to see how selling a phone to a friend at below cost price would be explained as beneficial to the business.

This is possibly a question that would be better and more accurately answered on the Tax Cutting board as the query is not really about the mechanics of trading on eBay but is all about proper business accounting practices.

AIUI, business expenses are only usually deductible against profits if the expenses is genuinely part of the business activity.  Buying a friend a cheap phone seems to be more of a personal activity than a business activity.

Pkman said:

What is the rule on making a loss on ebay? 

For example I bought 2 phone on amazon and sell on ebay. 

Paid £100, I sold for £150, I need to pay 20% of the profit.

The 2nd phone I paid £100, I can sell it for £150, but decided to sell to my friend for £90. Making a £10 loss.

So can I say I only make £40 profit??? Is this 'legal' in term of tax situation? 

Would it be more 'legit' if I do a listing for my friend to purchase so it is on my ebay p+l? 

(I am aware of the allowance, this Q is just purely for example above) 

RFW

Grumpy_chap said:

This is a confusing situation.
Not long ago, the OP was asking about how to buy on Amazon to sell on eBay for a profit:
https://forums.moneysavingexpert.com/discussion/6494890/what-are-the-potential-risk#latest

Now, the OP has purchased two phones, made a loss on one by selling to a friend at below cost and off-setting against the profit on the second phone.

I would actually view the transactions differently to how the OP has viewed them:

1. Bought phone (1) for £100
2. Sold phone (1) for £150 (making profit of £50)
3. Bought phone (2) for £100
4. Gifted the friend £10 - personal transaction nothing to do with trading
5. Sold phone (2) to to the friend for £100 (cost price) (thus making no profit on this sale)
6. Profit against the two phones (1) & (2) is £50

It always seems worth running the test, if you were in front of a judge, could you explain the action taken as a benefit to the trading business?  It is hard to see how selling a phone to a friend at below cost price would be explained as beneficial to the business.

This is possibly a question that would be better and more accurately answered on the Tax Cutting board as the query is not really about the mechanics of trading on eBay but is all about proper business accounting practices.

AIUI, business expenses are only usually deductible against profits if the expenses is genuinely part of the business activity.  Buying a friend a cheap phone seems to be more of a personal activity than a business activity.

Unless the OP has a lot of friends and a lot of phones then it doesn't look like a great business idea. Buying phones on Amazon to sell on Ebay is folly anyway. It can work occasionally but it's not going to be a long term proposition.

HillStreetBlues

RFW said:

Grumpy_chap said:

This is a confusing situation.
Not long ago, the OP was asking about how to buy on Amazon to sell on eBay for a profit:
https://forums.moneysavingexpert.com/discussion/6494890/what-are-the-potential-risk#latest

Now, the OP has purchased two phones, made a loss on one by selling to a friend at below cost and off-setting against the profit on the second phone.

I would actually view the transactions differently to how the OP has viewed them:

1. Bought phone (1) for £100
2. Sold phone (1) for £150 (making profit of £50)
3. Bought phone (2) for £100
4. Gifted the friend £10 - personal transaction nothing to do with trading
5. Sold phone (2) to to the friend for £100 (cost price) (thus making no profit on this sale)
6. Profit against the two phones (1) & (2) is £50

It always seems worth running the test, if you were in front of a judge, could you explain the action taken as a benefit to the trading business?  It is hard to see how selling a phone to a friend at below cost price would be explained as beneficial to the business.

This is possibly a question that would be better and more accurately answered on the Tax Cutting board as the query is not really about the mechanics of trading on eBay but is all about proper business accounting practices.

AIUI, business expenses are only usually deductible against profits if the expenses is genuinely part of the business activity.  Buying a friend a cheap phone seems to be more of a personal activity than a business activity.

Unless the OP has a lot of friends and a lot of phones then it doesn't look like a great business idea. Buying phones on Amazon to sell on Ebay is folly anyway. It can work occasionally but it's not going to be a long term proposition.

Much better if OP has few friends in this case.

RFW

HillStreetBlues said:

RFW said:

Unless the OP has a lot of friends and a lot of phones then it doesn't look like a great business idea. Buying phones on Amazon to sell on Ebay is folly anyway. It can work occasionally but it's not going to be a long term proposition.

Much better if OP has few friends in this case.

That's my devious mind thinking the friends were more to make up the losses than be actual sales!