HMRC - self assessment - paying cash to suppliers HELPP

bbmay

Hi,

I am not registered for HMRC self assessment but I want to by the end of this year. I sell stuff online, mostly laptops and mobile phones. Now the problem is that I buy these from individuals who receive their mobile phone upgrades or want to sell their old laptop. Mobiles are obviously are all legit because they are not blacklisted or whatever. Now I have been paying them in cash, with regular withdrawals from my bank account.

The total turnover was totalling £47k with almost everything paid in cash for inventories and some ebay purchases (bargains). Cash I made was well below the taxable limit but now I am really worried that if HRMC finds out, I will be in for a huge fine.

PLEASE HELP

anandp

Your best bet is to give the HMRC a call.

They are normally more than happy to help and for your query you don't need to provide any personal details either.

Take a look on the HMRC site for your local tax office, and give them a call.

stratty

You need to be registered for self employment within 3 months of the commencement otherwise you are in for a £100 fine.

bbmay

Thanks for replies. I am aware about the £100 fine but what I am worried about is to how to prove that the stock was purchased at £xxx since all the payments were made to individuals in cash. Would they accept regular withdrawals from cash machine as payment towards the stock?

fengirl_2

The fact that you have not registered for tax and have turned over £47k so far is an open invitation to be investigated.
Do you have a business bank account out of which these cash payments are being withdrawn? You could try and show that this is how the goods were purchased, but your own cash needs would be closely examined. Did you keep a contemporary record of cash purchases? Have you kept your Ebay purchase records?
I think you need professional help.

blue_monkey_2

Yes, I would agree, I think you need some help ASAP. if you are running a business - as you are - then you need to keep all records in order so you can work out what money you have earned.

You state that you want to register by the end ofthe year - well, the financial year ended on 5th April 2008 and you have already stated that you have turned over 47k. how long is this for? if you turn over more than 60k in a rolling 12 months period you also need to register for VAT.

I have traded on eBay for a long time and you NEED to keep records otherwise you'll have your income to declare and nothing to show you have purchased stock, from who from, etc.. it jut does not work like that.

This will not just be about the £100 fine, you say you know about this so I am assuming that you have deliberately not registered. Should HMRC decide to investigate you when you register (they sent me a letter saying they were coming to my home for a visit) you'll be opening yourself to all sorts by not keeping your books in order if running a business.

OK, lecture over. Go and see an accountant now as you know nothing about bookkeeping and the like and you really need to get this sorted out, you'll need to minimise the impact this is going to have - in theory you have nothing to say you bought the goods from anyone you could have found them or got given them, the money you withdrawl could have been for your own personal use - all they are going to see is that you have received an income of 47k. No, cash withdrawls on your bank account will not be acceptable, you might have bought £100 worth of stock but they will want to know how much you bought each item for (your cost of sale) and how much profit each item made, this is why you should keep account records. Your turnover is the total money you have had in - including postage, your profit is the amount of money you have made total in less cost of goods and cost of postage.

bbmay

I have stopped selling for now and too depressed to concentrate on anything else. All was done in a personal account, all my bills, gas/electric, phone set on direct debit. House rent paid via cheque. So no major personal outgoings, just the stock money. No individual records. Any such cases came to light before? Any positive input would be greatly, greatly appreciated. Once again, I have stopped trading/selling online.

Didnt go above VAT limit between April 07 and April 08 or before that. Do banks stitch you up?

stratty

bbmay wrote: »

I have stopped selling for now and too depressed to concentrate on anything else. All was done in a personal account, all my bills, gas/electric, phone set on direct debit. House rent paid via cheque. So no major personal outgoings, just the stock money. No individual records. Any such cases came to light before? Any positive input would be greatly, greatly appreciated. Once again, I have stopped trading/selling online.

Didnt go above VAT limit between April 07 and April 08 or before that. Do banks stitch you up?

I think you need to pull together the information as best you can and declare it to the tax office. Ebay certainly share information with HMRC so if you were to leave it then chances are they would catch you eventually. Tip offs can come from many and often unrelated sources.

bbmay

It wasn't on ebay but other vanues.

Fengirl: you seem to know quite a lot, please help. No contemporary prices were recorded but prices of most of the phones are written on the rough pad.

blue_monkey_2

Hi bb,

I think it is best you see if you can find a free half an hour initial consultation with an accountant and go from there. If working from home there are lots of things you can claim for as well so it sounds lik it will be in your best interests. Even so, for the sake of £500 then it mights save you tons of heartache in getting it sorted out, you can claim household bills, rent and other bits and pieces if working from home so your accountant will save you this much money - but you need to go and be upfront and honest about it all.

As stratty says, they are really knuckling down on people working and not declaring - while selling online is a great outlet many people also fall into the trap you have in leaving it too long to get sorted out. It is ery easy to do so don;t feel embarrassed about it all, just go and dowhat you have to do now, use some of that money you earnt to get sorted for the future.

I know it is too late now but the mistake you can make is mixing the business/personal funds. I messed up big time myself when starting (but had kept all invoices, etc.. as I used to be a book keeper) but spending the money is way, way too easy so it is better to run them for 2 different accounts.

Good luck, do let us know how you get on, won't you.

blue_monkey_2

Ooh, another thing. How did you sell, what records did you have of each sale (website, ebid, eBay, etc..) and did it all get deposited to your bank that way (Paypal, etc..) That would be helpful to the accountant to know where the money came from and what it was for.