Inland revenue may spell the end for eBay hobbyists

[abowan2012]

Am I alone in thinking the taxman's interest in clobbering hobbyist sellers could spell the end for eBay hobbyists like myself?

I buy and sell as a hobby but have taken fright at the Inland Revenue's reported decision to go after very minor players. 

I like buying old and interesting things as a way of sorting out friends and family with unusual gifts for birthdays, weddings, Christmas etc.

My hobby has got a little out of hand hand and I've been selling the excess - sometimes at a profit, sometimes at break-even and occasionally at a loss. 

I spend a lot of time doing research and enjoy writing about the items I acquire. I also enjoy the sociable aspect of the hobby when people delight in my finds as much as I do.

All of that is going to go with the spectre of the taxman now threatening to spoil my enjoyment.

The last thing I want to do is filing accounts. I am pretty sure my overheads - running a car, going to view, going to collect, going to drop-off, paying for stationery, breakages etc - will make the taxman's possible interest in me very unrewarding financially.  But the thought of having to log everything down will kill all the fun of it.

I suspect I am not the only one in the same boat and I fear the saleroom auctions will soon feel the pinch - and go out of business - as hobbyists like me drop out of the market.

The problem is, the taxman likes to go after minor players rather than taking what the country's finances are due from the Usual Suspects like Amazon and their ilk.

[papso22]

Its not been the Inland Revenue since it merged with Customs and Excise in 2005.

If you have been selling over £1,000 worth of stuff you bought to sell per year, already, then you should always have been declaring it. The new reporting regulations have not changed that.

[vikkipollardanddafyddthomas]

I cannot see HMRC worrying tpp much about people with low numbers of sales. The lady who posted yesterday (asking where her FVF discounts have gone) who has sold over £270,000 worth of brand new designer clothes, shoes and bags and claims she is a shopaholic and bought them all for herself and is now selling them at a fraction of what she paid, will have a lot to worry about.

[rainbowtrax]

Tbh, you probably need to look at HMRC's badges of trade guidance to decide where you fall: BIM20205 - Meaning of trade: badges of trade: summary - HMRC internal manual - GOV.UK (www.gov.uk). But, as has been stated, nothing has changed. If you would honestly be classed as trading now then you would have equally been classed as trading in December for example - or not. Only you can decide whether you can honestly say that you are a trader or you aren't.

I had a quick look at your sold items and it shows sales of around 3k for December before you add on the postage. So your turnover for that one month is over 3k therefore your details are going to be passed on to HMRC if you continue to sell at that rate. But that doesn't necessarily mean that you'll have a tax liability. That depends on whether you are trading or not. If the items you sell are all personal posessions such as excess gifts for people that you didn't end up giving then you're not trading. But if you're buying things with an intention to resell then you're trading and always have been since you first bought (or made) an item to resell.  

Also, profit doesn't come into it. You could be trading at a loss but it would still be trading. So IF you're trading then you should have been keeping basic records and declaring your profits (or losses) by self-assessment as soon as your annual turnover hit £1,000. That's turnover (which includes postage paid by buyers), not profit. You should also comply with all regulations regarding online trading.

If you're not trading then the annual £1,000 trading allowance does not apply. But your sales will be reported to HMRC by ebay if your annual sales exceed 30 items OR £1,770. What HMRC do with that info is an unknown quantity but as long as you are able to satisfy HMRC that you're not trading then you're good to go.

[vinylscot]

Please stop opening new threads about this. There are many other threads, and almost every conceivable situation has been addressed as well as can be expected, from contributors to the threads. Be a little considerate, and take a moment to read some of the other threads, instead of wasting everybody's time.

[victortardis]

I reckon people can open a new thread if they wish to, then it's up to the  individual not to read it.

It is not necessary to have to reply to every single thread.

[thesmi42]

Seems to be the only post the OP has created, so they are hardly likely to know if there is any kind of etiquette of that nature associated with this Discussion Board.  I may be wrong but actually I don't think there is, is there?

[vinylscot]

Not so much etiquette, just common sense. If you have a question, why not see if someone has already answered it?

[victortardis]

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@thesmi42 wrote:

Seems to be the only post the OP has created, so they are hardly likely to know if there is any kind of etiquette of that nature associated with this Discussion Board.  I may be wrong but actually I don't think there is, is there?

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If there is, then it's up to the moderators to flag it. I don't think any member here is actually an agent for Ebay, even though some get that impression.

[carbtec]

 You can even create a post on a discussion board to reinforce your self belief that you are not a trader, & attempt to fool everyone else at the same time. But at the end of the day it is HMRC that you have to fool, not yourself, not ebay & certainly not the rest of us.

If you have ever enjoyed the pleasure of a HMRC audit then you will be well aware that they are not fools & cannot be easily fooled.

[victortardis]

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@carbtec wrote:
If you are sat there uncomfortably worried about whether you can continue to fool HMRC then your self belief is crumbling isn't it?

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Don't know about the others, but I'm on a sofa dunking a shortbread biscuit in a chamomille.

I must say, quite a poetic contribution.

[litp*records]

What feels like a hobby to some is actually a full time job.

Those who are turning over 1000s (or even 100s) a month would be very wise to keep the receipts of all their buy-to-resell "hobby" purchases, statements of ebay fees, postage receipts, etc.  As these can be remitted as allowable expenses if/when HMRC decide that you're a business.  

[four_mid_able]

Iv'e tried doing that many times but all i seem to get is non related/out of date info no matter what (should be exact) key words i use.

[wyntersemporium]

Ah yes that one. Saw her a few months back. Loads of high end designer clothes

[vinylscot]

In this case, that would not happen. Apart from anything else, the quality of responses these posts get, once the same thing has been posted a few times, declines rapidly. Many of the more helpful posters simply can't be bothered repeating themselves again and again, for the benefit of individuals who can't be bothered looking at what has already been posted. Later replies tend to be less detailed, and often less reliable, so it's in your own interests to search first.

[txt.ltd]

18 April 2005.

Almost 19 years ago.

That's when Inland Revenue was dissolved and superseded by HM Revenue & Customs.

Seriously...

[thesmi42]

Merged rather than dissolved but hey ho the end result is about the same.

[floral.lines.supplies]

If you're buying to sell than you're mindset is a business. Make £1000.01p a year and you should already have been filling in your self assessment. Nothing has changed regarding that matter.

What has changed though, people maybe/will be less likely to get away without paying tax. 

https://www.channel4.com/news/factcheck/factcheck-do-you-have-to-pay-tax-for-selling-secondhand-on-v...

[nigel_paul_wright7557]

You could say "own items" about anything to get around the tax man but if your buying to sell on then you are trading and should have been using a accountant to do your tax return for that.

All that has happened is now the tax man will know how much your turnover is and he will be visiting you.

I have an accountant yet lost £500 last year.

[jolly-chef]

It's not even about making £1000.01, it's about turnover and intention.

For example: John buys a used car for £1200 with the "intention" of flipping it a month later for £1500 to make a profit.

John finds the car's not as good as he thought and makes a loss of £200 on it.

John is now liable for a self-assessment as his turnover is over £1000 even though he made a loss of £200.

To be fair it's all subjective, not black and white and proved by case law, covered in:

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim20205

For an example of the 'pointers' is:

"Is the asset of such a type or amount that it can only be turned to advantage by a sale? Or did it yield an income or give ‘pride of possession’, for example, a picture for personal enjoyment?"

If it was easy to work out, then there wouldn't be so many confused posters or incorrect new articles.