Reply to: Car Auctions

[Lucifer Box]

if he's selling all the tulipe that he bought in the past why should he pay tax on it ?

at first principle he is converting tulipe into cash,

if it's to be taxed he may as well barter and swap everything

He only pays tax on it (CGT) if sells it for more than he bought it for and then only if the total sales exceeds the CGT threshold for the year (about £8k-ish).

Of course, if he is deemed to be a trader, then he has to pay income tax on it.

[Dundeegeorge]

Nice try

"Someone who amasses a collection of X and sells it some years later when he's lost interest is not a trader. He may have to pay CGT if the gain is big enough, but definitely not income tax.",

if he's selling all the tulipe that he bought in the past why should he pay tax on it ?

at first principle he is converting tulipe into cash,

if it's to be taxed he may as well barter and swap everything

eureka....

perhaps an idea for a new ebay, barterbay, where people swap and barter things no cash changes hands

Milan.

However, in the UK anyway, you would be taxed on 'deemed' profit.
after all, it's only 'fair'.

[milanbenes]

"Someone who amasses a collection of X and sells it some years later when he's lost interest is not a trader. He may have to pay CGT if the gain is big enough, but definitely not income tax.",

if he's selling all the tulipe that he bought in the past why should he pay tax on it ?

at first principle he is converting tulipe into cash,

if it's to be taxed he may as well barter and swap everything

eureka....

perhaps an idea for a new ebay, barterbay, where people swap and barter things no cash changes hands

Milan.

[Lucifer Box]

You might be right, IR35 Avoider. This was a few months ago and things may have been clarified since then. The inspector said it was a matter of "sensible judgement" by the investigator (great, huh, nothing objective set down in law or anything useful like that).

[IR35 Avoider]

I vaguely recall the item about the man clearing his attic.

I think Hector was wrong in his case. It takes more than selling a lot of stuff to be a trader. Someone who amasses a collection of X and sells it some years later when he's lost interest is not a trader. He may have to pay CGT if the gain is big enough, but definitely not income tax.

As someone has pointed out, it's a different matter if you buy things with the intention of reselling them. Then I'd say you are trading even if you only ever buy/sell one item.

[hyperD]

There is a limit to the amount you can sell. 6 cars per year.

Bagpuss my good man, where on earth is that mentioned (escuse my ignorance?!?)

[hyperD]

Ah yes, "fair". Whatever could this government explain their policies without this magical, all policy encompassing word such as fair?

That's the same dichotomy of fairness as in "you're an employee under tax rules, but not under employment rules"...

[Bagpuss]

FFS! That's a new one?!?! What limits do they decide on that?

Or is it down to your "tax potential"?

There is a limit to the amount you can sell. 6 cars per year.

[Lucifer Box]

This programme was specifically concentrating on the eBay angle. The inspector said they had set up a dedicated eBay unit and reckoned that most eBayers with ratings of 1000+ would come under scrutiny sooner or later. He also said these were usually the reasons they classify someone as a trader:

1. Buying one or more items specifically with the objective of selling them profitably (pretty self evident and fair enough).

2. Selling multiple similar items (Dinky toys in this guy's case).

3. Shifting a lot of high value stuff (even if it was your stuff in the first place).

He gave the impression that it really did come down to whether there was potentially significant tax at stake. After all, as he said more than once, it's only "fair".

[hyperD]

FFS! That's a new one?!?! What limits do they decide on that?

Or is it down to your "tax potential"?

[Lucifer Box]

"I'm just thinking of selling a few privately",

doesn't that make you a trader ?

Milan.

Sure does. Heard an interview with a tax inspector a couple of months ago on Moneybox. They had recently classified a guy clearing his own loft on eBay as a trader!! In his case that was due to a large number of relatively valuable Dinky toys he was shifting!

[milanbenes]

"I'm just thinking of selling a few privately",

doesn't that make you a trader ?

Milan.

[Bagpuss]

I'm not convinced selling cars on ebay is a good business for an amateur.

I think a professional Ebay dealer is more accountable than a normal second-hand dealer for anything he sells and will almost always have to take back a car or cancel a trade if the customer is dissatisfied. This means they have to have real confidence in what they are selling.

On the other hand, an amateur selling on Ebay is likely to be perceived as such, i.e. as someone who won't go as far to protect his reputation, and this will be reflected in the prices he gets.

Well if you are a trader you have obligations a private seller doesn't. I'm just thinking of selling a few privately, and certainly not looking to con people (as many ebay traders are).

[IR35 Avoider]

I'm not convinced selling cars on ebay is a good business for an amateur.

I think a professional Ebay dealer is more accountable than a normal second-hand dealer for anything he sells and will almost always have to take back a car or cancel a trade if the customer is dissatisfied. This means they have to have real confidence in what they are selling.

On the other hand, an amateur selling on Ebay is likely to be perceived as such, i.e. as someone who won't go as far to protect his reputation, and this will be reflected in the prices he gets.

[Lucifer Box]

Of course, don't forget to tell the taxman.