Surprisingly this is an interesting article from our local accountants about online trading.
One of the latest areas that HM Revenue and Customs are targeting to raise funds from is the increase in the number of online traders. The tax office realise that, in certain cases, these traders fail to register for either Self Assessment or VAT, consequently meaning that a significant amount of tax revenue may be lost.
So, what constitutes trading? If, for example, you are interested in antiques, and buy and sell them over the Internet, then you may consider this to be a hobby, rather than a business. One of the criteria that the tax office will look at in deciding if a business is being carried on is the frequency of transactions. For example, if you sell one Chinese porcelain pot that you have owned for a number of years, then, clearly, this is not carrying on a business, and is merely a hobby. If you make a profit on this isolated transaction, then it is not likely to be considered to be taxable. However, if you buy a number of similar pots over a short time, and then sell all of them, this would look more like trading, and any profits may be taxable income.
This could apply to any number of different types of item; cars, furniture, electronic goods, in fact anything that is bought and sold with a frequency that the tax office would consider as being more often than normal. HMRC have published guidance on these points, which also include sections on selling through classified adverts, and at boot sales.
For any discussions on these points, or other matters, please call either Jeremy Fozzard or Mark Williams on 01279 658 499 from Mansell & Co.
