Receipts and costs for eBay reselling

Andrew1981

Hi, I've had a good search but can't find the answer.

I'm currently employed earning exactly £52k so anything else I earn will be taxed at 40% (unless I'm contribute to pension etc).

I've recently started a side business (very informally, buying on Facebook marketplace/car boots and reselling on eBay). I've only been doing this a few weeks but want to get my ducks in a row.

In an average week I'll spend perhaps £220 on stock/costs and resell for perhaps £300. Other costs include postage, and packing materials.

I obviously don't get receipts when I buy things on Facebook  marketplace. Is it enough for me to screenshot the advert (including the sales price), and add that to my receipts for postage and packing items? 

I suspect that would result in me paying less tax than simply deducting £1000 from my sales and paying 40% on my profit, so am keen to know whether screenshots would be accepted. I'm sure I won't be the only one in this position with eBay now sending sales data to HMRC but I wan't to make sure I'm above board.

Thanks in advance 

Bookworm105

I doubt you will find any definitive answer, but as you surmise the underlying principle of keeping self employment (for that is what you are) trading records is to have .... records 

if your cost base puts you over the trading allowance then yes of course keep whatever evidence you can to support your cost of sales calculation. Equally obviously it would be preferable if your purchases were not paid with cash, but I assume (sadly) a fair few will be, given it is FB marketplace.

Naturally if you can tie in your bank statement showing a payment out with a screenshot that is a lot more conclusive than a written record of £X paid in cash to buy Y item - although of course you should keep such a log anyway, if for no other reason than to track your own profitability! 

Andrew1981

Hi bookworm, 

Thanks for your advice. I suspect that there will need to be some guidance in due course. As you suggest, at the moment virtually all transactions are made via cash (as people prefer that when selling on marketplace, especially for lower value items).

I'll continue keeping logs and see what I get asked next year!

Bookworm105

Andrew1981 said:

Hi bookworm, 

Thanks for your advice. I suspect that there will need to be some guidance in due course. As you suggest, at the moment virtually all transactions are made via cash (as people prefer that when selling on marketplace, especially for lower value items).

I'll continue keeping logs and see what I get asked next year!

you will not "get asked", it is a self assessment process.

However, HMRC have the right to select a tax return for "review", at which point woe betide anyone unable to produce evidence to support the figures they submitted.
Bear in mind you are required (in basic terms) to keep records for the current tax year (Apr - Apr) and the previous 5 tax years. 

That said, if HMRC decide you are deliberately fiddling (as opposed to mere incompetence) they can go back up to 20 years when dishing out penalties for unpaid tax.

LITRG

Hello. We are the Low Incomes Tax Reform Group (LITRG), part of the Chartered Institute of Taxation who are an educational charity. We are not part of HMRC or MSE. Although we can’t give individual advice, you might find our website information about keeping a cash book for business expenses useful: https://www.litrg.org.uk/working/self-employment/business-record-keeping. If you require further help, we recommend that you contact a tax adviser, HMRC or one of the tax charities where relevant. You can find more information about where to get help with tax here: https://www.litrg.org.uk/tax-nic/getting-help-tax. Thanks.