My other account Suspended for refusing to change to a business seller

[**foxytori**]

So, it has begun. Despite me not trading, not selling anything new, not selling anything in multiple, and only selling personal items (currently I am selling my collection of Radio Times which I built up over many years when I was younger - most of which have now sold anyway so any future sales would be minimal) my other account has been suspended for selling. I am told this is because of volume of sales (despite ebay's own help pages stating that someone can sell tens of thousands of pounds worth of a collection and not be liable to tax or be classed as a business).

As I am in no way a business, and it possibly may be against the law to masquerade as a business when I am not a business, I'm really not sure what my options are. 

Customer service are useless (I have just received a message in very poor English to say that I have lost any appeal and the only way to lift the suspension is to "upgrade" (sic) to become a business seller.

[dch2112011]

This link may help you  - note the wording  'If you regularly sell goods or services through an online marketplace, this activity could be treated as a ‘trade’ for UK tax purposes and you may have to pay tax on your profits.' It does not state you will be classed as a business for any other reason (use the online checker)

information sheet HMRC selling online and paying taxes 

If your new items  purchased for your personal collection  sold for less than £1000 within the six month yardstick timescale  over a tax year then you are below the trading threshold and have no tax implication so even if declared  provided they and your other items meet the personal  item criteria.

The key to collections seems to be that  proving they are a one off situation  rather than a regular sales situation  -  

This is poorly defined by HMRC  but I imagine if you had a catalogue and photographic evidence of the collection this may suffice as would an explanation as to the size of the collection however a collector trading ie buying and selling items may have more difficulty

[rare_treat]

Okay, well in that case, the items that fall into the grey area of being treated as trading do total less than £1000. So, at this point, I wouldn't need to inform HMRC. I shall assess at the end of the tax year though, as it may just be easier to declare it all to be safe, given that I wouldn't be liable for tax anyway.

I think I may have got confused by another point yesterday - profit. So if the total in sales of "trade" items were over £1000, then you would have to declare it. But you still would only pay tax on the profitable amount? So if I traded £1100 worth of items, those trade items cost me £600, I paid £100 in fees, £200 in P&P, so made £200 profit, then I should only expect to pay tax on that £200?
Where you said yesterday, because I would be listed as private not a business, I wouldn't be able to deduct the expenses. But on that link page, it keeps mentioning profit, as opposed to total sales. Because if you had to pay tax on that total sales of £1100 then the tax expected on that would be more than the £200 profit made.

[moldosgifts]

I will never do this as a business. When I decided to start selling at the start of the year, I saw it as more of a hobby that got me back some money, rather than costing me.

More of a hobby reminds of the train guy had the same argument, he would'nt listen to the advice either but he seemed more entenched so maybe theres hope this op will take all the advice allready given and take the necessery action.

The op will be on the list way too many new items.

Good luck to him

[rare_treat]

You will find many "geek item" collectors never open or play with their collectibles, as that depreciates their value. Plus, any items that come with retail packaging, I see that packaging as being part of the collectible. So, yes, many of my items are listed as new. As another poster pointed out, as long as you’ve had them in your possession for 6 months, then technically HMRC see them as used.

[moldosgifts]

That's another argument technically they are preowned, not new.

As a private account you do not offer a guarantee new items from a business will have one by default.

Like i said good luck 

[dch2112011]

As far as I can see that would be a fair argument, the six months would be a measure where a business is pretending to be a personal seller , one of the potential problems is ebay's item classification in some categories gives a very limited choice 'new' being one of them  - several suggestions have been made with regards to ebay adopting a specific classification for ' new' collectables.

It is the word new that is contentious - the items are new in terms of the meaning of the word but used in commercial terms  for the very reason you have stated 

Maybe someone with a good understanding of collectables could come up with a suggestion as to how to advertise them on ebay  retaining the 'unused'  with packaging element but losing the new status which is used for both commercial and non commercial items ?

[pg_kicks]

Surely if HMRC class the item as used then the seller should otherwise you are opening a can of worms if HMRC do decide to investigate (chances are so low I'd be typing 0's for a while). Its the same as trainer collectors, I know a few with collections worth over £250k, if they sell they are not a business as such but HMRC might be interested.

[rare_treat]

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@pg_kicks wrote:

Surely if HMRC class the item as used then the seller should otherwise you are opening a can of worms if HMRC do decide to investigate

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I don't see that HMRC would care how you listed them for sale. If they did investigate, all they would care, I assume from what I've read and been informed, is that you can prove you had them in your possession for at least 6 months.

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@pg_kicks wrote:

I know a few with collections worth over £250k, if they sell they are not a business as such but HMRC might be interested.

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I’m sure they would have paid tax on their earnings to buy £250K worth of trainers, sales tax on the items (at least someone down the line would have when they were purchased for the first time from the manufacturer or retailer), and if they sell them all for £250K or less then I don’t see how they could reasonably be taxed on any of it. Again, I think it would come down to what you can prove. If they sold them all and got back £300K, then yes, £50K is profit and should be taxed. (Or if they were gifted a good portion of the items, then that could be liable to be taxed as well.) But, even in that scenario, I can’t see that they should be classed as a business.
But going back to a point I made some time ago, anyone looking at their listings will assume they are a business, but "... people often can’t say for sure whether an eBay account is a business or not. The government can, and once they make a decision you probably can’t change that, as it’s their country, they’re in charge, so it’s their rules. Same goes for eBay. You can argue all you want with them about you being a private seller or business, but it’s their platform, they’re in charge, so it’s their rules. C'est la vie."

[dch2112011]

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@rare_treat wrote:

Okay, well in that case, the items that fall into the grey area of being treated as trading do total less than £1000. So, at this point, I wouldn't need to inform HMRC. I shall assess at the end of the tax year though, as it may just be easier to declare it all to be safe, given that I wouldn't be liable for tax anyway.

I think I may have got confused by another point yesterday - profit. So if the total in sales of "trade" items were over £1000, then you would have to declare it. But you still would only pay tax on the profitable amount? So if I traded £1100 worth of items, those trade items cost me £600, I paid £100 in fees, £200 in P&P, so made £200 profit, then I should only expect to pay tax on that £200?
Where you said yesterday, because I would be listed as private not a business, I wouldn't be able to deduct the expenses. But on that link page, it keeps mentioning profit, as opposed to total sales. Because if you had to pay tax on that total sales of £1100 then the tax expected on that would be more than the £200 profit made.

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I think you are overthinking the 6 months - If a trader is insistant that they are selling personal items and are not a business but HMRC think otherwise one of the measures they may use is whether the items sold are used by you or purchased by you over 6 months prior to selling them - there will be other measures they will use - it will not be isolated to the 6 month rule. 

Like wise if a seller insists they are selling personal items they are not allowed to claim business expenses  because they are not a business and are reporting that they are selling unwanted personal items which have not been purchased to resell and therefore the total amount including fees and postage and original purchase price is seen as profit for tax evaluation - similar to VAT a private individual cannot charge nor claim back VAT under normal circumstances.

In your circumstance ignore your costs as you are declaring them as unwanted personal possesions unless you are notifying HMRC that you are selling as a trader / business in which case you can choose the allowance or business costs as an offset

The grey area seems to be the possibility that HMRC could class a genuine seller of personal items as trading under their rules for tax evaluation but that this would not necessarily make them a business for any other purpose.

ebay have there own rules for the type of account you use to sell from which is defined but not clearly enough  like HMRC large quantity selling is a criteria for ebay and regular selling is a criteria for HMRC but neither is explained with clarity so without better information both scenarios could easily apply to genjuine personal sales !

However if you are self employed and complete your annual tax return your personal sales can be included as other income - you would not be charged tax on this non taxable income - indeed this is the correct procedure for declaring your income in this situation

[rare_treat]

Okay, I’m either not getting it again, or the rules are backwards.

So, (for arguments sake, let’s say) HMRC decided to classify me as a trader. I’ve sold £600 worth of my items for £1200, but got back only £600 after postage & fees. You’re saying, HMRC would still say that full £1200 was "profit" and therefore taxable? So I could be paying HMRC £240 in taxes (assuming I had no tax-free allowance left). Which would mean I’ve done all that work, just so I can get back £360 for £600 worth my unwanted items.

[dch2112011]

No if you are asked to put in a return, you either declare as a trader and choose the £1000 allowance or opt to use business expenses - if you declare as a personal seller  - if accepted you pay nothing, you submit your total gross sales figure making no deductions -  it is non taxable income. 

if you declare as a personal seller  you cannot claim back against expenses. ie reduce your sales figure by your costs.

If you did want to correct an error after submitting your return and being assesed you normally can do so within 12 months but your tax or repayment may change

If you were subject to an online compliance check (investigation)  this is worst case scenario, your personal knowledge of your activities  - and of course whether you are selling on other platforms or mediums form part of the equation 

Your explanations seem reasonable for selling a collection except for the 'friends' items and perhaps the hint of buying and selling - of course HMRC base their opinions on what you tell them - if they have suspicions then they may start asking questions and looking for proof from you

You are doing nothing wrong at the moment as far as HMRC is concerned as you are not liable to submit a return even if you are trading - if you trade and sell more than £1000 you must inform HMRC that you will be submitting a return by 5th October  - usually this is by registering for self assesment - your tax return must be submitted by 31st Jan 2025 based on your account registration date (it is actually 3 months after notification if you started to trade after 5th April 2023 but before 5th April 2024 but just keeping it simple )

If you trade and sell less than £1000 gross you do not have to tell them anything unless you are already using self assesment as a business and then you have to declare personal and trading sales as seperate other income !

It is complicated 

This is not the same for ebay who require traders to use a business account - they have their own criteria.

[rare_treat]

I know that’s it unlikely they would classify me as trading. But, assuming for a second that I had bought those items for £600 (that I mentioned before) just with the intention of reselling – so a trading classification would be just in this case – I would be pretty annoyed not to have made a profit. I would be mortified to then be expected to pay £240 in taxes – and so make a loss!

If they are classifying someone of trading – i.e. buying goods for resale – then how can the costs of trading not be considered? I just don’t understand that, not at all.

It seems virtually impossible to trade in low value goods without being a business then. Tax on your overheads would be too high.

[papso22]

Costs of trading as a business can be offset against sales, but you have to be able to evidence those costs.  

[rare_treat]

@dch2112011 said, “you either declare as a trader and choose the £1000 allowance or opt to use business expenses”. Traders can’t claim expenses, and are charged tax on total sales, not total profit.
Are you saying that traders can claim expenses, as long as they have proof of those expenses? So, if after items costs, postage, and fees, you only break even, you wouldn't be liable for tax on the sales total?

[papso22]

I suggest you go to gov.uk for your information.

The Low Incomes Tax Reforms Group also had a useful website with examples.

Traders are businesses, they are the same thing with different names.  The only other things are private sellers selling unwanted personal possessions. 

The £1,000 trading allowance is a tax  easement/simplification for small businesses.  It is irrelevant for private sellers.

[dch2112011]

This link  defines how to determine if you are in business 

Am I in business Trading Standard law 

[dch2112011]

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@papso22 wrote:

I suggest you go to gov.uk for your information.

The Low Incomes Tax Reforms Group also had a useful website with examples.

Traders are businesses, they are the same thing with different names.  The only other things are private sellers selling unwanted personal possessions. 

The £1,000 trading allowance is a tax  easement/simplification for small businesses.  It is irrelevant for private sellers.

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This is not entirely correct for 'tax reporting' a private seller can be a trader and have a mix of both types of sale this is why all sellers are granted a £1,000 tax-free allowance for ‘trading income’. So if all your trading income is below this threshold, you won’t need to tell HMRC and fill in a Self Assessment tax return. 

For all sellers  whose trading income is above £1000 a year excluding personal sales they are required to tell HMRC and register for self assesment. It doesn’t necessarily mean you’ll owe tax to HMRC. What’s known as your personal tax allowance means you can earn £12,570 a year before you must pay any tax.

Self assesment is not just for business - see explanation below

Self Assessment is a system HMRC uses to collect Income Tax.

Tax is usually deducted automatically from wages and pensions. People and businesses with other income and support payments must report it in a tax return. If you receive income of more than £1,000 a year you need to send a Self Assessment tax return.

However  your statement in terms of  consumer law is correct -the two definitions of trading serve different purposes  HMRC on one hand and Trading standards on another. In consumer law trader is an all-encompassing term for any business seller.

The third factor relevant to members is the policies ebay have which dictate which entity should use a business or personal account which is where this thread started !

[rare_treat]

Well the subject matter, and the going back and forth between comments and different posters, had lead to confusion. I think I’m a bit clearer now.

I am selling personal possessions. So, in the eyes of HMRC, I don’t need to inform them of any income from that, and I’m fine using a private account on eBay.

A few of my items fell into a grey area, where they could be seen as trades. I’ve stopped that now, but if I had continued and was deemed to be selling for profit, I would have been seen as a business by government bodies, and would have needed to comply with the related requirements for businesses selling online. eBay would have required me to change to a business account, as well.

Because the items sold under trade (the grey area) would be under the £1000 allowance, I wouldn’t need to declare them to HMRC, either. (Unless I was filling out a self-assessment tax form anyway.)

Does that sound about right now? I hope so, as I got to a point where I felt like blowing my brains out! 😂

Also, sorry to @**foxytori**  for hijacking your topic!

[dch2112011]

You got it !

[rare_treat]

Thanks again for your help @dch2112011 and alll others that have contributed.

Now, back to the OP.

Out of curiosity, @**foxytori**  / @allsortsallsorts1  …

You seem to have sold around 4200 items over 8 years on the affected account. So that's about 525 a year on average. One of the first private sellers with a high feedback count I looked at (at random), had sold 15K in 22 years – so about 680 a year on average. They’re still going. So did you actually sell most of those items in a shorter period? I’m just wondering whether high sales volume in a single year did trigger it, not the total amount.