Am I in trouble with HMRC?

121

Member
I'd like to sell used items online as my main income very soon.

I've been selling items over the years, but haven't made any profits worth mentioning. In fact, after accounting myself recently, I haven't exceeded £200 per year in online profits. Some years I made a negative profit and only one year it was around £200. I've held jobs in the meantime. I starting selling stuff onoine in 2008.

I signed up with HMRC as self-employed years ago and when they asked me online to declare any additional income, I ticked that I didn't make anything as in my mind, I hadn't started the business idea yet.

I read in the past that you don't have to declare additional income if it's under £400 per year.

The trouble is, I've been mentally compromised due to addictions and didn't fathom that I had to declare everything. That £400 cap was for those that didn't make additional income from PAYE jobs.

I'm worried that HMRC will penalise me in the thousands for not declaring my additional income over the years from selling things. I've also got 16K to clear in interest from my university tuition loan year ago.

I need to clear the air regarding tax before selling again. I want to pay any tax owned and I've never tried to avoid it intentionally. I'd glady pay whatever is owned.

Could this slip up run me thousands in debt from HMRC penalties or worse?

I want a clean slate. Not sure what to do here.
 

121

Member
After self-accounting, you would see every item I sold perfectly itemised in Excel. I didn't know that stock bought for resale didn't affect the final sum at the end of the year. It's only sales that are factored, so any stock bought that hasn't sold isn't included.
 

121

Member
My mother told me last year that my teachers at school said I was on the spectrum and asked her to get me checked out. She didn't as she didn't want to accept it.

I think this is key to my confusion.

Maybe I'm looking too far into this. Should I just start selling full gusto? It's want I'm good at doing.

I'm thinking I should clear up these loose ends first.
 

DJDave87

Active Member
Sounds like it would fall under capital gains and little if any tax due.

If you only decided on the business now/recently, stick with that. Start fresh now. Keep your personal records for the old stuff and dont worry about it.

If youve not already have a good read through the Gov website, practically everything you need to know regarding your tax obligations should be on there. Set up a business and click through the links that seem relevant to your position/intentions.
 
If you Google 'Ebay untaxable income' you will find that you can 'earn' upto £1000 without having to pay tax as long as it is not part of your business. You have stated that you will soon start selling online as a business so when you do you will need to keep accounts like any other business and pay tax on any profit but whilst you have been selling socially and doing something else to pay the bills you have the £1000 per annum allowance.
 

Judge Mental

Well-known Member
I think HMRC have got better things to do than chasing down what would amount to tiny amounts of tax. I would put it out of your mind and start your business. Good luck with it, it’s a good sign that you want to do things properly.
 

121

Member
Here's the thing.

I downloaded my PayPal and eBay Data recently. Less than half of my sales starting 2015 are related to mostly low-end smartphones, so would be seen by HMRC as business sales. I seperated the phones as business sales and the others as private sales in Excel.

I've purchased 240 phones since 2015, but only successfully resold about 110 over the last 6 years. The auctions went for mostly the same or less than I paid for them so I didn't declare. My PayPal/eBay records will show this to be exactly true. After self-accounting recently, it appears that I might have owned a little tax for some of those years. These are activites I've ben doing after work .

I stopped selling last year. I still have the other phones as I was holding them last year until I knew for sure what I'm doing was legal. I bought most of my stock in 2020. A number of those 110 sales were to test if I could fix logic boards. That's why they were resold for less.

Should I phone HMRC and explain? I don't want to wait to be audited.

I want to be completely transparent, but I can't phone HMRC and tell them I've been in a self-induced blur since 2015. I was thinking I might be able to write off any previous profits as running costs, but I'm not sure if that's possible.

I'm in a weird situation. I don't have a drinking problem anymore.

I don't mind paying any fines, as long as HMRC don't stop me from actually starting my business plans I've had on hold.

That business plan is the only thing I have. Without that, it's game over.
 

noiseboy72

Distinguished Member
I think you are over thinking and worrying about this unnecessarily - which given your comments about perhaps being on the spectrum is totally understandable.

Unless you have been submitting accounts for the previous years, all you have been doing is a little bit of extra curricular low end trading - which frankly, many of us do, totally off the radar and allowing us to make a little money from our hobbies. I make 3D prints for people in exchange for beer money and skills I don't have. So I printed some train parts for a person and he made me a brass chassis for a new loco in return.

When you start to run the business properly, things will change, but you can draw a line and start afresh. HMRC will not be in the least bit interested unless you have been making huge profits or this has been your primary form of income in prior years. In most cases, unless you have been fiddling the tax and claiming benefits, you will be left totally alone. My wife has run her self employed music business for 7 years and has never been audited. She just submits her returns every year and that's that.

HMRC will not stop you from trading. You can start your business plan and take it from there.

All I would say is never assume that your business will follow the plan. 99% of the time, they don't. Markets change, consumer fads change, technology moves on and what seemed like a money earner 6 months ago might not be so much now. Plan a fall back if you can and never put all your eggs in 1 basket - unless you have the sort of personality who can take a big fall and get back up. Much better to play safe and be able to walk away if things don't go as planned then have to keep plugging away at something that eventually will defeat you.
 

121

Member
Thanks for the advice noiseboy72,

I'm really looking forward to executing my plan. I've been holding back on it for way too long.

I just know something amazing is about to happen.
 

Desmo

Distinguished Member
Should I phone HMRC and explain? I don't want to wait to be audited.
The chances of you ever being audited by HMRC are slim to non-existent. I’ve been in business for over 20 years and have never been audited of had any questions from HMRC. Accounts are filed and I pay my tax… it goes no further than that for most people.
 

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