When will the tax man come knocking for selling stuff privately?

rubadub

At what stage/amount of selling will you be liable to pay tax on the sale of private goods?
An english guy I know was selling stuff on ebay and once he traded over £20,000 they said they had to report him. I thought this was fair enough but what about if you were selling an expensive car second hand? are you treated as a dealer or something? how could they differentiate between the two.

If you had €100,000 come into your paypal account but only really made a profit of €5,000 would this be taken into account or would you need to keep accounts to prove things.

BrianD

Trading 'professionally' on eBay is no different to any person who is a sole trader, say, running a bricks and mortar shop. There is absolutely no difference and, yes, you are liable for tax etc. I suppose because eBay is a relatively 'new' departure it has not yet come onto the Revenue's radar. It will do.

If you were selling an expensive second hand car that you owned you are probably selling at less than you paid for it so it's the same as a private sale except you conducted the sale electronically.

I suspect that large cash movements through eBay and PayPal are being monitored.

rubadub

BrianD wrote:

Trading 'professionally' on eBay is no different to any person who is a sole trader, say, running a bricks and mortar shop. There is absolutely no difference.

Thats what I want to know, at what stage does it become "professional" there must be a cutoff point, e.g. you can import up to about €22 without being liable for duty. The difference is you are not registered as a sole trader, maybe I should be looking for the definitions of a sole trader. My mates father deals in the buyandsell, makes a few 100 a week buying and selling stuff, I may ask him.

BrianD wrote:

If you were selling an expensive second hand car that you owned you are probably selling at less than you paid for it so it's the same as a private sale except you conducted the sale electronically.

If it was a collectors car it may go for more than you paid. Would you have to keep accounts to show you are making no profits? Is it just the profits you are liable for?

lomb

the sale of a private car used personally is indeed free of any tax be it vat or profit, this includes personal classics. u are unlikely to make on any car either classic or modern, the bottom is falling out of the classic car business as all the elder generation are dying, and younger people who have money want range rover sports:rolleyes:

lomb

incidentally, u are indeed liable for ebay sales probably for vat also funny enough. even if u dont make alot out of it, b careful as the revenue may want 21% of your sales, and thus help clean u out..
as regards income tax, there is no cutoff persumably, u have to keep accounts, and pay the tax due, im not sure how vat works on used goods, is it on the margin like used cars (ie only charged on the profit-not the car value) or the whole thing. me thinks its the whole thing. so b careful.. ps u must b very successful to flog 100 grand of stuff on ebay?

rubadub

lomb wrote:

b careful as the revenue may want 21% of your sales, and thus help clean u out..
ps u must b very successful to flog 100 grand of stuff on ebay?

Well I am just using examples. You can see completed listings and see how many of a certain item sell per day, if you undercut the main seller you may shift 100,000 of an item a year, say memory cards for psp. If I sold 10 cards a day at €100, that is €365,000 a year, if I made €5 on each one it is a profit of €18k which is not bad for a few hours work per day, you say revenue would want 21% so I take it that is on the 365,000.
I am just wondering what would be best, it seems it would be low volume high margin items if you are liable on the entire price.

BrianD

The answer is straightforward.

Q. What do you do for a living?

A. I trade on eBay

Therefore you are a sole trader. Remember there are other taxes involved including income tax. You can assume that everything you're selling is VAT inclusive because unless your registered you won't be able to claim it back.

People think eBay is different, it isn't. Just look at it exactly as if it was the shop owner down the street selling widgets over the counter.

Kinetic^

Depending on a few things, this will either be an Income tax issue or a CGT issue.

If you are buying goods, with the intention of selling them on ebay for profit then it would be classed as trading income so you would be classed as a sole trader. The profit, if any would be taxed, or if a loss occured then it would be either carried forward against future profits or it could be allocated against any other class of income.

However, if you are selling off your own stuff that you purchased for your own use then it would be classed under CGT. Capital gains on assets which have an economic useful life of less than 50 years, eg. a tv, car(i'm aware of classic cars) etc., are not taxable.

So in affect, Ebay might have repoorted him, but there's a possibility that he might not have to pay tax if the stuff he was selling fell into the 2nd category.