It’s funny but nobody seems to be able to say where the boundary is for busy something for a hobby, only to sell it to finance another purchase for the hobby.
Exactly. It's as if this kind of activity is weird, totally abnormal. Sure, it's not normal to most "normal" people, but most "normal" people don't sell anything either. The law governs sales activity, not every day life of "normal" people, and so they have to factor in the fact that some people sell as a way to move on to the next thing. Funnily, on
When you may need to pay tax for selling goods or services online page, the hobbyist is misrepresented as a person who seeks to make profit in the course of their hobby -- see "The model car collector".
The way HMRC talks about what is a trade and what is not on a common folk level is makes it look like there's very little that counts as non-trade. Out of all examples given to the common folk as a quick guide at
When you may need to pay tax for selling goods or services online, only one is non-trade. And that's "clearing out the attic". The problem with that is that most people don't sell things just because they're junk and they're taking up valuable space. In that case, people just throw that stuff away. The amount of effort required to list and deal with a sale is far more than what you get for the junk, so most people with lives to live wouldn't bother.
But none of the examples touch on the situation where someone is selling crap because they no longer need it and
want their money back. Money doesn't grow on trees - if I no longer need an item, and if it's worth a decent amount of money, I'll sell it, and you best believe I'll sell it for the market value and not for pennies, because pennies are not worth the effort.
None of the examples presented on that page describe a scenario similar to this. In not doing so, willingly or unwillingly, HMRC is setting a very low baseline for trade activity
in the eyes of the common folk. If you're an accountant, or once you start reading further, you of course know that this is non-trade. But by not expressing that clearly to the common folk on that page, HMRC is effectively making this
more a slippery slope
than it needs to be.
If anything, it's
offensive to me as a tax payer: they aren't courteous enough to publicly
acknowledge that wanting to
get your money back for personal stuff you no longer need is your
right. Maybe the folks at Downing Street don't need to worry about money and can afford to let bygones be bygones, but to me, every penny counts, and if I can get back money I've spent in the past, I have to do it.
Sure, it's covered by the capital gains thing, but it's not included in any of the
examples that they've written for the common folk. The barrier to understanding the whole capital gains thing is a little higher than what the common folk can grasp without help.
The taxman should enter the 21st century. So far, they're only catching up with the 21st century in the online sales department, which is
normally viewed as trade activity first and foremost, and only then there's a notion that "
oh yeah, I almost forgot: a very small percentage of population will sell things as non-trade very occasionally. 1000 quid threshold will cover every non-trader's wildest dreams".
But what they fail to take into consideration: it's super easy to buy things in this day and age, things you don't need -- and when it comes to selling unwanted stuff you've bought, then things start to look unbalanced... Many barriers to buying are gone: you ain't gotta travel anywhere to buy things (travel is extra effort = serves as a bit of a deterrent), everyone has an internet-accepted card (I had to put in some work to get my first online-capable card back in the day), there's hot photos to entice you to buy, next-day delivery, and things are available from remote places that you would've never bought from before... So people buy without trying first, without as little as seeing in-flesh first, often without even
thinking first. For me personally, from my experience, online buying is unbalanced: I know that my itch ain't scratched until I actually hold the thing in my hands. A lot of times, I want something based on photos, I get excited about it, I
build up the hype in my mind, but when I finally interact with the thing, that kind of puts in perspective and takes me back to reality, and I make a more informed decision, which is usually "I don't need it". Good when this is me traveling to the store; bad when this is me buying online. Unfortunately, in this day an age, with a lot of things, your only option is buying online. And again, there are so many factors that have made online buying super easy and accessible.
So it's super easy to buy without thinking, but then when you regret buying and want to sell things in order to get your money back (returns are not always available), then there's more potential hoops you may have to jump through. When I say it's easy to buy things, I mean that it's easy to buy
a lot of stuff, but then getting rid of all that stuff to get your money back? You end up in the gray area where you have to worry about having to submit paperwork and prove things without having any clear idea about
what exactly you need to have ready - in advance. It's like "we'll get in touch with you and we'll take it from there". And here comes uncertainty.
My point is: in this day and age, the whole trade vs non-trade should be defined with this whole online
buying dynamic in mind, with "I bought too much shizzle I don't need, and I want to sell it to get my money back" dynamic in mind. Because, again, money don't grow on trees. I can't just throw my unwanted stuff away, or sell it for 1 quid a pop. I have to do everything I can to undo the mistake of an online shopping spree. And for that, there should be more info selling unwanted stuff and criteria on things should be more clearly defined.
I want
transparency. As this whole online buying dynamic is automatically putting
more people into the sales territory. The more you buy, the more you're going to be likely to sell unwanted stuff. And the more money you spend, the larger the amounts generated from selling unwanted stuff are going to be. So more and more common folk are going to be in the territory where they need to worry about all this -- hence the greater the need to make it easy and clear for people. And while I understand there's need to catch people who do business by selling and pretending to be a casual non-trader, that has to be balanced with the non-trade selling that's growing with the online buying thing. All I'm asking for is
transparency so you can go and do the right thing from day 1. Because without it, if you're selling, you're in this gray area and are automatically assumed to be the dirty tradesman until proven not guilty. I resent that.
It shouldn't be that I fill out the form and then have to wait for them to follow up on it requesting
who-knows-what more evidence or whatever (this uncertainty makes someone inexperienced in this area very anxious). The form should facilitate provision of all necessary evidence, and
not by "upload
anything relevant", but by specifying
what exactly you need to upload depending on the answers provided to the previous questions. That would require fleshing out and clearly definining more of criteria. And that would be one step away from making that criteria public to people so they know what they're getting into
before they get into it, and can either make an informed decision on whether, or start doing things by the book from day 1 so that comes the assessment day, they already have a bullet-proof case, and once they submit the form, that's where it ends 99.99% of the time, without waiting for a follow-up.
I would imagine a lot of people have been caught this way.
