We have recently taken on a client who got into a spot of bother with HMRC. They were buying and selling on eBay. What started out as selling old items they didn't want turned into visiting car-boots, markets and second hand shops to buy goods with the intention of selling them on eBay.
When our client first started using eBay, this was not classed as a business, however when she started to buy with the sole intention of selling the goods she brought this was.
If you are buying goods with the sole intention of selling them to make a profit, this is a business. No matter how you dress it up, it's a business.
Due to having been trading for several years without declaring her profits, HMRC took a dim view. We have helped this client, however she has refered someone else to us who finds herself in a simialar situation.
I can not stress enough, how important it is to ensure you inform HMRC when you start to trade. Keep all receipts and log any mileage. Also keep records.
Remember tax is not due on the sale price, but on the profit made. If you buy something, this is the cost of the goods, you then sell the goods, this is the gross profit. From the gross profit, you take away any expenses and this final figure is the profit. So if you buy a lamp for £20 and sell it for £50, the gross profit is £30. If you spent money on calls to arrange to view and buy the item, plus fuel to go and collect it, plus any other expenditure, say £15 in total, you are left with a taxable profit of £15. Assuming as in our clients case, she had no other income and a full personal allowance of £7,475 or around £143.75 per week, she would pay no tax at all until her profit was above the £143.75. She would need to pay national insurance, however if as in the case of our client she was only making around £80.00 per week, she would not pay national insurance either.
I would recomend if you are in this situation, you take advice as soon as possible.
If you read this and want to email us, we don't charge to give advice, we will get back to you in a couple of days at most.
Hope this helps you decide what to do.
West Midlands Bookkeeper and Payroll Services.