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Are You Trading?

Written by Jon Cooper

The economic downturn has led to more and more people using online auction websites, car boot sales or market stalls to sell items.

This does not automatically mean that you are trading and would, therefore, need to be registered for tax and, possibly, VAT.  However, it can difficult to identify the point where trading starts.

As a rule, the HMRC would consider you to be trading if the following conditions apply:

–          you want to make a profit.

–          you have bought items to sell them on.

–          you sell items often or regularly.

–          you register as a business seller on an internet auction site.

–          you sell from a market stall.

–          you buy items wholesale or through trade suppliers.

–          you change or improve items before selling them on.

–          you sell items that you have just bought.

–          you sell items that are related to another business that you run.

–          you have borrowed money to pay for the items that you are selling and you have to repay the loan.

Generally, you would not considered to be trading if the following conditions apply:

–          you only sell items to cover your costs.

–          you sell a personal possession, something that you have been given or have inherited.

–          you only make sales occasionally.

–          you are not registered as an online shop or trader on an auction site.

–          you make no changes or improvements to the items that you sell.

–          you occasionally sell a personal possession that you have acquired or bought some time ago.

At CooperFaure, we have extensive knowledge of personal tax matters.  If you are unsure as to whether you are trading or have any questions on your circumstances, please contact welcome@cooperfaure.co.uk to arrange a free consultation.

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