Another tax question

[gingerjed1]

We've all seen car boot sourcers stocking their eBay shops, they aren't getting receipts for the items they buy so how do they file tax returns on that? For example, they buy a Le Crueset casserole dish for 50p and sell it for £20. There's no receipt from the car boot trader so where is the purchase price proof? Are HRMC going to accept the eBay traders word if they say they paid £15 for it?

I'm flirting with the £1700 sales number and I've certainly sold over 30 items so I'm trying to get a handle on what I should be doing? Do I keep going and just wait to see what happens?

[kempseykate]

Years back, when I became self employed, I attended an HMRC session for newly self employed. This question came up, and we were told to make our own receipts. This is what I did during the time I was buiying to sell, and it was never queried.

Not sure if that is still their suggestion, probably best to give them a ring and find out.

[papso22]

HMRC are highly unlikely to accept the trader's word for the value of the item when purchased.  The trader should be prepared to declare the sales value with no allowance for cost.

Anyone buying at a car boot to sell on ebay needs an ebay business account and should probably already be registered with HMRC, not waiting for them to ask questions after January 2025.

[lucy_farmer]

If you're going to phone HMRC make sure you do it the minute the lines open in the morning, and even then , be prepared for a 15 min phone queue.

[gingerjed1]

What do you mean by "The trader should be prepared to declare the sales value with no allowance for cost"?

That's not how business works, shops don't pay tax on the sale of an item without deducting the wholesale cost surely? How would shops with wafer thin margins survive?

[papso22]

Shops will have evidence of the cost price of the things they sell.  Your post was about traders who do not have that evidence, hence my reply.

If you can't prove it, you can't allow for it.

[lucy_farmer]

I think Paps means if you have *no* receipts, you can't put any costs  of the *stock* through the books. (i.e. you can't make up your own as Kate (above) mentioned -that may have been passable years ago but not now).

I 'd imagine a lot of car-boot 'stocker-uppers' get their stock for such a small outlay, the actual cost of the stock (as opposed to the rest of the business costs; fuel, storage, post etc etc) would make a very small difference to the amount of tax owed, so they may be prepared to put up with it?

i.e. the difference in the price of buying stock from somewhere less 'fly-by-night' than a car boot (a shop or warehouse where they may actually give you a receipt!) might negate the savings you'd make by putting stock-costs through the books..... if you see what I mean....

[technthread]

This is why I don't go to car boot sales but you can get around it with common sense and as detailed a paper trail as you can.

HMRC appreciate that you can't obtain a receipt, it isn't practical for many reasons so you do the following:

You withdraw XXX from the bank account before the car boot sale as sourcing funds. 

You then record a line by line record of what you bought and what the individual/ total spend was along with a photo of the car boot sale and the pile of items you purchased. 

Any surplus funds you didn't spend either credit them back into the bank or carry them forward as surplus to the next car boot sale. Your records will always be there to explain what you did if HMRC query it. 

[kempseykate]

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@papso22 wrote:

HMRC are highly unlikely to accept the trader's word for the value of the item when purchased.  The trader should be prepared to declare the sales value with no allowance for cost.

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It was HMRC that told me (and others) that it was acceptable to write out your own receipts. It didn't cause any issues in the years I was trading.

[lucy_farmer]

Oh yes, I'm not at all suprised you were told that.

Just over 20 years ago my husband phoned up HMRC to ask about  selling  stuff on ebay: the reply was 'oh yeah, that's fine. As long as you're not buying-to-sell, or making-to-sell, you carry on! It's your own stuff you can do what you like with it'.

I think the world has changed rather since then....🙁

[technthread]

Someone will correct me if I'm wrong but if your total expenses are under £1,000 (and your turnover is over £1,000) you may be able to just claim the trading allowance of £1,000 under 'partial relief' and then none of the line by line recording is necessary.

[myriad*seller]

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@gingerjed1 wrote:

What do you mean by "The trader should be prepared to declare the sales value with no allowance for cost"?

That's not how business works, shops don't pay tax on the sale of an item without deducting the wholesale cost surely? How would shops with wafer thin margins survive?

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Only buy items from sellers who will provide a receipt, or even take a loads of blank receipts and ask the boot sellers to complete them for each sale.

Without documentary proof of the cost price you cannot claim it back as a business expense against tax  

[kempseykate]

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@lucy_farmer wrote:

Oh yes, I'm not at all suprised you were told that.

Just over 20 years ago my husband phoned up HMRC to ask about  selling  stuff on ebay: the reply was 'oh yeah, that's fine. As long as you're not buying-to-sell, or making-to-sell, you carry on! It's your own stuff you can do what you like with it'.

I think the world has changed rather since then....🙁

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This wasn't 20 years ago, it wasn't on a phone call, it was a session for newly self employed sellers, and surely the info they gave him was correct then and now? If you aren't buying/making to sell and it's your own stuff, then you can do what you like with it.

[technthread]

This isn't true at all. 

[pillarboxred]

I don't know. As a dealer who has used car boot sales from the early 1980s to date as a source of stock, I record sales and purchases correctly. My accountant thirty years ago said my accounts "couldn't be broken".  I was never investigated. Business is so costly to run, it is hard to make a profit so my tax payments have always been modest and I sometimes receive a refund if the following year is poor. A colleague reported a loss to HMRC who noticed a £6000 charge to his credit card for a nice holiday he had in the US so they mauled him. I've never had a holiday to the US so maybe I've done it wrong.

[pillarboxred]

You can so. But you need to be consistent. HMRC can look at a lot of things like your home, mortage, car, bank accounts, spending and derive figures to compare with what you claim to be the case. I very rarely obtained receipts for purchases but HMRC were always happy to record the money I made from the purchases. The figures added up: my ATM cash withdrawals on a Sunday, my stated payments for stock and coffees, my resultant sale receipts, my eBay fees, bank deposits, all the columns added up vertically and horizontally,

[pillarboxred]

Yes, if you enter correct figures everything squares up. It's amusing when people are caught with a pile of cash which cannot be explained by their accounts.