@vintique*violet wrote:
I abide by the law. If you buy and then resell any items you don't want then you are a business seller. That is the law not eBay rules. Private Sellers either ignore this or are just misinformed.
If you frequently and continuously buy with the intention and purpose to resell to make a profit, that is business activity and would require a business account. However, there is such a thing as " hobby" selling which often does not garner a profit as expenses of such can be higher. This would come under miscellaneous income and is not necessarily classed as business activity unless it is " grown" into a viable business making profit. Many people are hobby sellers for the enjoyment...they need to clarify with HMRC.
Totally different to selling unwanted personal items, which can include unwanted gifts, clothes, electrical, games, collections, china , furniture, in fact mostly anything; which is what a private sellers account is for and does not require registration with HMRC (or to hold a business account with eBay), unless an "asset" sold is £6000 or more then CGT could apply.
What exactly is the law that you are speaking of that states "if you buy and then resell any items you don't want then you are a business seller? "
@jere-nott
Very good and very clear post!
I think many folk get confused or don't understand HMRC definition of 'profit'.
If someone bought a camera from a charity shop last week for £10 and sold it today for £5000 would that be a trade?
No - it's a personal purchase and just good luck, and even though the item is over the £3000 threshold, it's an excempt item for CGT because it's mechanical.
Yes - he sell cameras, even though he is also a collector, the sale was too quick to be considered a purchase for his collection, so a trade purchase and sale.
Or, perhaps..…...
I don't think so - He knew the value as he saw Paul in the Antiques Road trip buy and sell a similar item, but that's by the by. BUT - sold it in eBay so already over the £1700 threshold, HMRC will know all about it and someone in the forum said he needed to register.
Just changed his Don't Think so to Yes - cos now he is in a panic. Becomes a sole trader or small company owner (even better!), sells the item to his business/company at full market value ( he wasn't trading as a business/company at time of purchase and didn't use business/company funds - which is why a company might be better) also puts in as assets car, computer, etc. Deducts eBay fees, postage etc. Passes it all to an accountant, cos they can guide re expenses to claim, to discover he has made a loss but he's very chuffed cos he is a high rate taxpayer from his job/pensions and there is this wonderful thing call sideways loss relief. Decides to look out for and buy a couple of things next year, to keep the business operating.
(Accountant MAY have had words about this but even accountants don't know how the £1700 limit will play out)
BUT - if HMRC can't see that this guy in intending to make a profit, not from the sale of an item, but an overall profit in an annual basis, they could decide he doesn't meet the badges of trade and is therefore NOT a business - and has therefore underpaid tax!
Of course a business that makes a loss is still a business, but HMRC does follow through if the loss is continuous, as the need for a business to meet the Badges of Trade is continuous.
EBay, if course, don't base any reasoning a seller is a business seller on this critera.
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