Self Assessment Questions re How to Declare 'Bundles'

SKA123

I have bought & sold items online and now need to complete a Self Assessment as I am over the £1k trading allowance, and have (inadvertently) become a Sole Trader. I have some questions regarding how to declare 'bundles' please.

Eg a Beauty Advent Calendar. Cost £250 from the retailer & contains 24 items. Purchased knowing that I wanted to keep some items and that I would sell the other items because I wouldn't use them. So it fits with the HMRC 'intent to sell' definition.

If I sold 10 of the 24 items individually for a total price of £121 incl P&P.  Do I declare Purchase Price = £250. Sold for £121. Less Post / expenses.

Or, do I say £250 / 24 = £10.42 each. 10 items = Purchase Price £104.20. Sold £121. Less Post/expenses. If I do it this way I wouldn't have any corresponding purchase receipts.

The retailer says the RRP of the Advent Calendar is £1250, but I assume that doesn't come into any of the calculations because I didn't pay that.

Also, I have purchased items and they have come with 'Free Gifts with Purchase'. I have kept the item I purchased (£250) and sold the Free Gift because I won't use it. The retailer says the Free Gift has a RRP of £350, but I didn't pay anything.

Do I declare Purchase Price = £0. Sold for £75, less expenses?
Or Purchase Price = £250 (the price I paid for what I bought to keep). Sold for £75, less expenses? Again no corresponding receipt. 
Or because it was free, do I not declare it? I can't think HMRC would be happy at this.

The examples I have given might also be a bit more complicated as I have 'rebundled' some items for sale ie they came from different purchased beauty boxes and I have put them into one sales listing.

Thank you for any guidance offered.
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martindow

Unless some items are clearly more valuable than others, I would value the 24 items in the £250 calendar the same at 250/24 each.  In the self assessment there is a section called something like items taken for personal use where you could put the value of those you have used.  The full £250 could then be in your accounts as an expense on the date you bought it.

It may be worth contacting @soolin who posts a lot on the eBay board. 

https://forums.moneysavingexpert.com/categories/ebay-auctions-car-boot-jumble-sales

She has experienced a similar situation as she sometimes buys job lots from auctions and needs to work out the costs of individual items as she sells them on.

SKA123

Brilliant, thank you so much for replying. The individual items do vary a lot, but it's difficult to say what they are each worth until you have sold them - and sometimes things are suddenly worth an extraordinary amount because some influencer on TikTok says they like it! 

DullGreyGuy

SKA123 said:

Brilliant, thank you so much for replying. The individual items do vary a lot, but it's difficult to say what they are each worth until you have sold them - and sometimes things are suddenly worth an extraordinary amount because some influencer on TikTok says they like it! 

Are these all items you can buy normally or are they special presentation for the bundle? Some advent calendars have miniatures you cannot otherwise buy which will make things more complicated. Assuming they can all be bought then you need to proportion the price you paid by the ratio of their retail price -v- those you kept which will be fairer than claiming they are all 1/24th if you say their value varies significantly. 

SKA123

DullGreyGuy said:

SKA123 said:

Brilliant, thank you so much for replying. The individual items do vary a lot, but it's difficult to say what they are each worth until you have sold them - and sometimes things are suddenly worth an extraordinary amount because some influencer on TikTok says they like it! 

Are these all items you can buy normally or are they special presentation for the bundle? Some advent calendars have miniatures you cannot otherwise buy which will make things more complicated. Assuming they can all be bought then you need to proportion the price you paid by the ratio of their retail price -v- those you kept which will be fairer than claiming they are all 1/24th if you say their value varies significantly. 

Ah never thought of that! Typically in a beauty box or advent calendar you get a few things that are full size, some that are travel size and some that say 'sample' on them. I also had a few items where the retailer said they were made specially for the box ie the product isn't for sale separately, and some items that were discontinued for sale before the box was sold, such as hair wraps and flight masks. I just checked a few creams on their brand sites and they are not for sale in Sample sizes. 

SKA123

I spoke with a very nice HMRC Technical Tax person on the phone. I didn't do this previously as I read from other accounts that I would be hours & hours on the waiting line, but in fact it was only 20mins just after 1pm.
He said there is no hard and fast rule or formula to follow to work out the value of each item in a bundle.
That I should use the total figure I purchased for eg Advent Calendar = £250.
Then work out an 'assumed purchase price' of each of the individual items using a method which is fair and which I can substantiate. It doesn't matter that some items were not available to buy from a retailer eg Samples, as long as I can explain why the method I have used to come to an assumed purchase price is fair.
The value of those items I kept goes into the relevant box in the Self Assessment.
The value of those items I sold are declared as trading and expenses etc are deducted from them.
For the Free Gift with Purchase items the purchase price is zero and whatever I sold them for would be 100% profit minus expenses etc.
It basically comes down to personal integrity, the trading definitions and the Badges that are used to determine trading-type activity. So as long as I am taking an honest approach and saying I purchased items with the intent to sell some and to keep some and that I have been honest and fair in how I determined the assumed values, and that I can explain myself if asked to justify what I have done, then it should all be fine.
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