HMRC Advice

[FriedrichVonHayek]

I have just received a letter off the HMRC wanting to know if I am an online trader.

Like many people I have bought and sold on eBay and I am quite concerned about their interest.

Precious metals can be high value transactions but you make very little or no profit after postage and eBay fees especially in this market.

I do buy and sell on eBay but I don't usually make much,in fact I just collect things for a while get bored with them then sell them on again and buy something else.

I will phone them tomorrow to see what they want.

[HelpingHands]

Tell them you have been selling your own collection and its not a business.  I assume you havent exceeded the CGT threshold.

[HelpingHands]

Or VAT turnover of 75k or whatever it is.

[FriedrichVonHayek]

8 minutes ago, HelpingHands said:

Tell them you have been selling your own collection and its not a business.  I assume you havent exceeded the CGT threshold.

No, I don't think I would be anywhere near the CGT  threshold.

I have sold many coins in the past and made money  off them but I had owned them for a couple of years.

[FriedrichVonHayek]

I phoned them this morning and they wanted me confirm I wasn't a business seller which I told them I was not.

The woman from the HMRC told me to be mindful of the tax implications when selling online.

I have now cancelled my ebay and paypal account as it really isn't worth the hassle of eBay and paypal fees and now the HMRC scrutinising your online transactions.

I would suggest that anyone selling online should think twice about selling over the internet.

I have had a pretty sleepless night!

[SoulUK]

HMRC are now on the crack down for the internet sellers.

Need to remember weather or not you are near the VAT implications (currently if you do £82k a year in turnover within the UK & EU you must be registered for VAT) you have to declare all business sales. (this is for business)

Personal Sales are in the grey area, as yes we all have the CGT threshold (currently at £11k), However HMRC do poke into it if your assets (PMs in this case) change regularly and your making money - They might determine your asset movement (and the profit from such activity) equates to a business.

So say i bought 10Ozs a month every month, and sell 5Ozs every month. I believe HMRC would class that as a business.

[BaldyBob]

There are quite a few flags, but as SoulUK says, if you are buying and flipping quickly you will be attract attention. Using BIN instead of auction is also another flagging point apparently.

In reality though, they are using the guise of clamping down on tax avoidance to further control and interfere with the little man. If it was purely about lost revenue, I am sure we could all name 5 companies they could pursue.

[MickB]

When the day comes to selling my silver, I'll get my wife to open an ebay account so I can avoid the taxman on half of it.

[garthy]

If they're gonna start taxing me for my private sales I'll start calling all the PM's I buy as stock to offset my tax bill, I'll probably end up with a nice little rebate.

[HighlandTiger]

I've made a loss this year on my sales. I'll be be asking for a tax rebate if it happens to me.

[JB3]

 

It isn't just tax on the profits you'd have to pay... if you're sole trading, you have to pay Class 4 NICs as well. If you are trading through a company, you need to register and file returns.

 

DOI: Not an accountant, but I do have a small business (nothign to do with PMs) alongside my PAYE-taxed employment.

[FriedrichVonHayek]

It looks like you are best off contacting the HMRC if you want to sell precious metals online and get advice from them.

I now realise that eBay is not a good place to sell as they will turn over your records to the HMRC.

From my research its looks as if the HMRC are not that interested if you are making a profit they want to know if you are trading,obviously they want any tax owed to them.

Ebay may have come to some arrangement with the HMRC with regard to their tax affairs and decided to sacrifice their sellers.

The outlook for eBay is not too promising in the UK at least.

[BaldyBob]

I don't really understand your reasoning. HMRC may ask questions, so give them a ring? I bet if you rang twice you would get conflicting advice.

It looks like a fishing trip. They sent out letters and waited for people to get in touch, going for the low hanging fruit.

EBay is what it is, and it has its uses, but have no doubt that all the dealers will handover your information just as easily.

[FriedrichVonHayek]

5 minutes ago, BaldyBob said:

I don't really understand your reasoning. HMRC may ask questions, so give them a ring? I bet if you rang twice you would get conflicting advice.

It looks like a fishing trip. They sent out letters and waited for people to get in touch, going for the low hanging fruit.

EBay is what it is, and it has its uses, but have no doubt that all the dealers will handover your information just as easily.

Maybe  they were just fishing,but they give you 30 days to respond and I am not willing to take my chances with HMRC.

I did give them a ring and the woman from the HMRC and she seemed happy that I had sold my personal items but to be mindful of the tax implications when selling online.

They can interpret the laws to suit their agenda.

Hopefully I won't hear anything more from them,but I have taken this as a warning.

[BaldyBob]

34 minutes ago, FriedrichVonHayek said:

They can interpret the laws to suit their agenda.

That is it in a nutshell Friedrich ?

[Pipers]

Well the Tories did get in on a ticket to crack down on Tax avoidance, you didn't think they were talking about there mates did you. 

I just had a thought what would happen it a person had a collection of say Toby jugs and then decided to sell them slowly on eBay would they get a call from the tax office? 

FVH you could reduce your tax by registering your coins and flat ware as historically important ? 

[Pipers]

I have just had a search and it seems you must of not filled in your self assessment form in correctly and you have an eBay account this is a big red flag! 

[goldbones]

Id say its classed as trading if it is more than occasional unfortunately, see here and scroll down:

https://www.gov.uk/working-for-yourself/what-counts-as-self-employed

"

sell online, at car boot sales or through classified adverts on a regular basis"

Note it doesn't say profit, it just says "regular basis"

Also note at the bottom it says "You’re probably not trading if you sell some unwanted items occasionally"

Probably? what does probably mean? and it says occasionally...whats classed as occasional and what is classed as regular?

 

Almost certainly i can think of a clear cut case: suppose you bought a couple of monster boxes of silver (1000 ounces) tax free from Germany and then went on eBay to sell them individually with the goal to make a profit, that's a clear cut case of being a sole trader at least from a tax law point of view.

[FriedrichVonHayek]

I started to collect Silver in 2009 and sold all of it in 2011,I then started to collect again when prices went down from 2011 onwards.

In recent years I have taken losses when I have sold,I have quite often sold Silver sporadically when an unexpected bill has came in.

I now have Sold all of my precious metals the problem is that red flags will be raised due to the fact that precious metals are high value items but as you all know trying to flip precious metals for a big profit is nigh on impossible on a regular basis on eBay especially when the price has been in freefall since 2011.

In my opinion to be classed as a trader you really have to be selling every month,but the HMRC might interpret this differently.

8 hours ago, Pipers said:

I have just had a search and it seems you must of not filled in your self assessment form in correctly and you have an eBay account this is a big red flag! 

I don't fill in a Self assessment  form,I am just an employee so I am on PAYE.

[FriedrichVonHayek]

Another ambiguity with the HMRC rules is they will try to determine whether you have bought an item to make a profit.

How many people on this forum can honestly say they have bought precious metals with the intention of losing money!

I will just have to wait and see how this plays out.

If I have to pay a hefty tax bill I will never look at a Gold and Silver coin again!

[SoulUK]

When it comes to buying something to make a profit they also look at the time held

if your seen to be buying an assets and reselling the assets within a "small" time frame it does look like trading.

Also, lets say you've be buying PMs for 10 years and you now wish to sell some of your assets, but continue to buy more as well. This might be considered trading as well.

It can be a very grey area, which I suppose is the point. HMRC want you to declare everything and then they decide what you owe.

 

 

[goldbones]

I think by profit they mean profit above movement in the price of silver, the price of silver or gold is subject to capital gains tax which is a separate tax from income tax.

So for example say you bought some silver coins for £12 each and sell them at £17, £5 is income taxable

Now suppose you buy silver at £12 each and the price goes up 10% and you sell them for £18.20 , well the £5 is income taxable and the £1.20 is capital gains taxable (assuming it is not a Britannia).

This is because what you buy=capital goods and the gain or loss is capital gain or loss, while the profit is outside the capital.

Understand?

[FriedrichVonHayek]

5 minutes ago, SoulUK said:

When it comes to buying something to make a profit they also look at the time held

if your seen to be buying an assets and reselling the assets within a "small" time frame it does look like trading.

Also, lets say you've be buying PMs for 10 years and you now wish to sell some of your assets, but continue to buy more as well. This might be considered trading as well.

It can be a very grey area, which I suppose is the point. HMRC want you to declare everything and then they decide what you owe.

 

 

To be honest the only people who can decide are the HMRC.

I suppose the one thing in my favour is that Silver has gone down from $49 oz to $13 and change since 2011 and also the Gold price has nearly halved.

It would be hard for the HMRC to say I have been making money buying and selling precious metals.

[FriedrichVonHayek]

5 minutes ago, goldbones said:

I think by profit they mean profit above movement in the price of silver, the price of silver or gold is subject to capital gains tax which is a separate tax from income tax.

So for example say you bought some silver coins for £12 each and sell them at £17, £5 is income taxable

Now suppose you buy silver at £12 each and the price goes up 10% and you sell them for £18.20 , well the £5 is income taxable and the £1.20 is capital gains taxable (assuming it is not a Britannia).

This is because what you buy=capital goods and the gain or loss is capital gain or loss, while the profit is outside the capital.

Understand?

I thought the capital gain would have to be over £10000 in a year before any CGT is payable irrespective of what type of coin has been sold.

[tepid]

3 minutes ago, FriedrichVonHayek said:

To be honest the only people who can decide are the HMRC.

I suppose the one thing in my favour is that Silver has gone down from $49 oz to $13 and change since 2011 and also the Gold price has nearly halved.

It would be hard for the HMRC to say I have been making money buying and selling precious metals.

 

Have you kept records & receipts? Once Ebay fees are included, P&P, storage costs and the like, I'm sure even traders can file their taxes in such as way that not tax liability is incurred.

 

Also, can you give us a rough idea of the volume/frequency/turnover of your PM sales on Ebay? I'm sure other members would be interested in what would trigger a fishing trip by HMRC.