A while back in the UK deals thread there was a lot of talk regarding income tax / VAT etc so I thought it would be a good idea if we had a thread dedicated to it. 

As the majority of people on this forum are from North America, and they have totally different rules / regulations to tax etc we can keep this thread for UK only.

It seems like ebay are now clamping down on the masses of Chinese sellers who undercut all the UK sellers and not pay any tax / VAT:

 

***VAT compliance for overseas sellers***

 
09 November, 2016 | 01:34PM GMT
 

Hello,

Earlier this year, the UK government announced new measures to tackle the non-payment of VAT by overseas sellers whose goods are forward deployed to the UK.

We work closely with HMRC to ensure our sellers comply with their VAT obligations. If we are informed by HMRC that a seller is not complying with these requirements, then we will take appropriate action, up to and including permanent suspension.

We have already contacted hundreds of overseas sellers to notify and educate them on the need to comply with the law and we will continue to remind sellers of their obligations.

To ensure you are compliant, and for further details on this issue please read the latest guidance from HMRC at:https://www.gov.uk/guidance/vat-overseas-businesses-using-an-online-marketplace-to-sell-goods-in-the-uk

eBay remains committed to providing a level playing field for all sellers and we will continue to work closely with HMRC on this issue.

Regards 
The eBay Team

I often wonder how many of you bother to see an accountant. Selling multiples of the same set is obviously a business and hence, taxable. There's no escape!

18 minutes ago, Mhd747 said:

A while back in the UK deals thread there was a lot of talk regarding income tax / VAT etc so I thought it would be a good idea if we had a thread dedicated to it. 

As the majority of people on this forum are from North America, and they have totally different rules / regulations to tax etc we can keep this thread for UK only.

It seems like ebay are now clamping down on the masses of Chinese sellers who undercut all the UK sellers and not pay any tax / VAT:

 

***VAT compliance for overseas sellers***

 
09 November, 2016 | 01:34PM GMT
 

Hello,

Earlier this year, the UK government announced new measures to tackle the non-payment of VAT by overseas sellers whose goods are forward deployed to the UK.

We work closely with HMRC to ensure our sellers comply with their VAT obligations. If we are informed by HMRC that a seller is not complying with these requirements, then we will take appropriate action, up to and including permanent suspension.

We have already contacted hundreds of overseas sellers to notify and educate them on the need to comply with the law and we will continue to remind sellers of their obligations.

To ensure you are compliant, and for further details on this issue please read the latest guidance from HMRC at:https://www.gov.uk/guidance/vat-overseas-businesses-using-an-online-marketplace-to-sell-goods-in-the-uk

eBay remains committed to providing a level playing field for all sellers and we will continue to work closely with HMRC on this issue.

Regards 
The eBay Team

An overseas seller does not have to pay VAT on goods sold to HMRC unless the goods are stored in, and despatched from the UK. If the goods are sent from outside of the EU the onus is on the buyer to pay any VAT on the goods bought.

Ebay are just protecting themselves by issueing this notice informing sellers. If they did not do that then legally they could / will be responsible to pay the VAT due themselves.

 

Edited November 18, 20169 yr by botchy123

It´s essential for anyone starting up selling more than the odd set of Lego to see an accountant before beginning, whatever country the live in.

It´s also important to understand the consequences of purchasing abroad and using a forwarding service. In the EU, VAT is now payable in final destination country of the goods, not where they are bought. That´s why if you buy from another European Amazon, the price may be higher or lower than the national price. It works the same if you sell to another EU country, however most sellers don´t bother for 1 or 2 sales.

 

I've got enough knowledge to do my own tax return on top of my PAYE and I don't think I'm in danger of triggering the VAT threshold anytime soon!

Certainly looks like the Government is cracking down on people avoiding tax. 

http://www.mirror.co.uk/sport/football/news/sir-alex-ferguson-among-hundreds-9288782

Certainly best to go after the big fish first as the man at the bottom will not stand a chance.

4 hours ago, TabbyBoy said:

Be warned, this is often for private accounts only and sellers on here should really have a business account. HMRC are actively keeping an eye on private accounts so, be careful out there!

I get a lot of offers on my private account but, nothing on my business account - eBay hardly give anything away, right?

I hate these promotions because you just see lots of idiots listing crap and asking for silly money.

I moved over to a business account just before christmas, can't be doing with any grief from HMRC.

Edited January 15, 20178 yr by blocp13

6 minutes ago, blocp13 said:

I moved over to a business account just before christmas, can't be doing with any grief from HMRC.

Could you say something about taxes you are paying, how many percent do you have to pay from your profit?

Here in Germany it sucks - the extra profit is added to your income and handled as your main income what makes about 30% or even more that you have to pay of your profit...

Edited January 15, 20178 yr by mauro23

10 minutes ago, mauro23 said:

Could you say something about taxes you are paying, how many percent do you have to pay fromyour profit?

Here in Germany it sucks - the extra profit is added to your income and handled as your main income what makes about 30% or even more that you have to pay...

I think that as a sole trader selling on ebay that I will only pay tax on my profit after all expenses, stock and my yearly tax allowance. This would work out ok for me as I can claim back fuel for my trips to pick up lego my postage for when I order online and all my packaging costs. If I go over the tax allowance I will pay 20% on profits.

The profits would also be added to your income here as well, you can earn £1000 free of tax from extra selling like on ebay but I don't think this will stand on a business account, but you could use this allowance from having a personal account also.

Edited January 15, 20178 yr by blocp13

Since most of us have a "proper" job, the UK tax-free allowance will already be absorbed through PAYE. Anything else that is sold with the INTENTION of making a profit needs to be recorded and tax paid on the profit. Remember to offset stuff like boxes, tape, bubble-wrap & 45p/mile to cover "business" mileage. Time spent cannot be claimed.

I'll soon be running another business (Ltd. company) where my salary will be at the tax-free threshold and the balance paid by share dividends.

I was on a good salary when I was working (for somebody else) so I had to reluctantly give 40% of my profits to the tax man.

If in any doubt, you MUST see an accountant, don't rely on advice on here as it differs from country to country. I've been prosecuted by the HMRC (UK tax man) and it's the most stressful and expensive experience I've ever had - it ain't worth trying to evade it!

Yes, eBay/Paypal together make more money than us per set and we do all the sodding work! However, 75% of my sales are local cash... shhh!

Edited January 15, 20178 yr by TabbyBoy

5 hours ago, TabbyBoy said:

Be warned, this is often for private accounts only and sellers on here should really have a business account. HMRC are actively keeping an eye on private accounts so, be careful out there!

I get a lot of offers on my private account but, nothing on my business account - eBay hardly give anything away, right?

I hate these promotions because you just see lots of idiots listing crap and asking for silly money.

I know, you tell me this every time I even think about selling anything

I wouldn't do anything stupid like listing 15 sealed sets all at one time. It's not my fault if someone bought me one Jokerland set for Xmas that I didn't want and I now want to sell it to make some money to buy a set that I do want

Like I've said before, I do appreciate what you're saying, but I doubt people will get their collar felt 99.99% of the time if they just sell the odd set every month or two. I hold out on selling sets hoping for the price to appreciate too much for me to be listing a lot of stuff anyway. Good advice though and I do keep it in mind. If I start to list multiple sets I'll definitely be doing it the right and legal way.

Please feel free to move this and the other parts of this series of comments....

Two things to bear in mind with UK sellers.

1) A couple of years ago HMRC stated publicly that they are going after small time eBay / Amazon / Etsy sellers who are doing so undeclared:

2)  With the passing of the draconian Investigatory Powers Bill HMRC now have full access to your web-browsing history, so tying in posts here to online sales is simplicity itself. 

After all it's easier chasing the little guy.... 

Remember starting April 2017 you can sell up to £1000 worth of sets per year tax free.

1 hour ago, thebrickdad said:

Please feel free to move this and the other parts of this series of comments....

Two things to bear in mind with UK sellers.

1) A couple of years ago HMRC stated publicly that they are going after small time eBay / Amazon / Etsy sellers who are doing so undeclared:

2)  With the passing of the draconian Investigatory Powers Bill HMRC now have full access to your web-browsing history, so tying in posts here to online sales is simplicity itself. 

After all it's easier chasing the little guy.... 

Most importantly though is that now, all online marketplaces have to disclose all transactions made by any individual or business when requested to do so by HMRC. So it's made things a lot less time consuming for them now.

At the end of the day it's not that big a deal really. Probably will work out if you make 10K profit in a year you owe about £500 after you deduct your costs.

 

 

4 hours ago, blocp13 said:

I moved over to a business account just before christmas, can't be doing with any grief from HMRC.

Good for you. Best of luck with everything. 

1 hour ago, Highlander said:

Remember starting April 2017 you can sell up to £1000 worth of sets per year tax free.

That's £1000 profit not sales so, several thousand £s worth of sets can be sold. With a little "Profit Engineering" you can reduce you liability a huge amount. You can even set up a private account for the occasional single (not multiples) expensive set as part of your "Personal Collection" which is subject to CGT instead of IT. Those of you not seeing an accountant will unlikely hear of the legal workarounds.

1 hour ago, TabbyBoy said:

That's £1000 profit not sales so, several thousand £s worth of sets can be sold. With a little "Profit Engineering" you can reduce you liability a huge amount. You can even set up a private account for the occasional single (not multiples) expensive set as part of your "Personal Collection" which is subject to CGT instead of IT. Those of you not seeing an accountant will unlikely hear of the legal workarounds.

Even better

HMRC don’t care if you have a business account or personal account on Ebay, its Ebay that cares about that. The HMRC only care about the income you declare or more importantly don't and therefore the tax you pay/claim back. As Tabby says an accountant is the best course of action but if you are only doing small sales volume the self assessment is not that difficult and there is plenty of info on-line about completing and about what can and can't be claimed as a legal expense. In my experience accountants will probably save you more than they charge you, unless you are well versed in the area of tax and expenses or your volume of sales does not warrant it. There is also great free accounting software that really does make keeping track of transactions easier and then makes the end of year books a whole lot more simple.

I've been selling a number of sets to Europe lately and I'm starting to get feedback on the fees that they have to pay to get them out of customs. The latest was a $57 EUR order of minifigures that cost an extra $30 EUR for customs fees. Am I doing something wrong with my customs form or is this normal? I list almost everything as "other - Plastic toys" and then further describe them as bulk plastic toys and put the order value (minus shipping costs).

I have no interest in lying on the customs forms, but if adding EIN numbers, HT codes or a proper country of origin helps, I'm all for helping out.

I think you are not doing anything wrong. When goods arrive into Europe, we have to pay customs fees and VAT. I don't know limits for other EU countries but in the CZ, is limit only 22 EUR for customs fee (10%) and 150 EUR for VAT (21%). It doesn't matter if you mark package as "gift" etc. but customs cannot control all packages, sometimes it happens, that you are not charged any fee for import.

Yeah, VAT at between 16 and 24% is going to be charged on any shipment and the rest will be customs tariffs and/or clearance fees, which could be a flat rate fee or a minimum.

Declaring less than 20 euros or so value and/or sending by postal service rather than courier are ways around it for small sets/low value items, which is what the China sellers do.

Stuff sent by couriers like DHL tend to pass customs whatever happens and you get the standard dispatch fee to pay.

 

On 1/15/2017 at 7:44 PM, Highlander said:

Remember starting April 2017 you can sell up to £1000 worth of sets per year tax free.

That has been dropped now. So you should pay tax on the £1000

http://www.telegraph.co.uk/tax/income-tax/government-quietly-drops-ebay-airbnb-tax-break/

Did my first self assessment sole trader tax return for the 2016/17 period. End result: a £19 rebate! Can I get away with not completing the submission? Is the only conclusion that my PAYE contribution has been miscalculated? I'm happy for HMRC to keep the money.