How to approach HMRC with tax/accounts problem?

[Lescinskas]

Hi guys, I have few questions for you. Basically I'm full time employed, but I'm selling stuff on Ebay since July, I decided to upgrade my account from private to business, because I reached all requirements, but after I done research (I know I should done before) I realized that I needed to let HMRC know that I'm trading and pay tax (I don't mind). Question is how do I approach them about this? Because I don't have all receipts from previous 4 months just paypal/ebay transactions and bank statements but sometimes I paid cash for postage etc. What the best way to sort this mess out? I completely don't know where to start. If could someone help with this step by step would be very grateful. If you have any questions let me know I'll try to help as much as I can. Thanks in advance guys.

[Tax Champion]

If you have been ebay selling only since July this year there isn't a big problem, as you will not have accumulated any arrears.

You should register as self-employed as soon as possible; if your expected profits, after expenses, will be less than £5315 in this tax year, you can claim exception from class 2 national insurance. You will need to complete some sort of accounts for your first trading period (the easiest year end to use is 5 April or 31 March) , but these can be quite simple if turnover is low. If you do not have full records, a resonable estimate of expenses will be acceptable.

You can register as self-employed by telephone, or by completing a form CWF1 which can be downloaded from HMRC website, and you will be sent a self-assessment tax return after 5 April 2012.

[Lescinskas]

Hi Tax Champion, I registered yesterday by phone for Self-employed. I don't sold a lot since July because I'm just starting and speaking about profit I haven't made any, because I'm re-investing everything. They mention something about tax exemption, but I'll wait till I get all paperwork. To get idea what to do next, it is all new to me, I think it is going to take time till I work everything out.

July profit: 8.18 - re-invested
August profit: 27.51 - re-invested
September profit: 177.81 - re-invested
October profit: 295.12 - re-invested

So basically, I hope I can work it out, if not then I don't know. We will see what's going to happen. Thanks for you advice.

[nikkisizer]

Nikki, the idea of the Forum is to provide initial advice and not just to say "I can help, get in touch". [original content removed - Ed]

[towat]

The fact that you reinvest your profits doesn't mean you haven't made any, admittedly your figures are very low so nothing to worry about, but you would still have a tax liability on your profits even if they were ploughed back into the business in the form of stock.

[Tax Champion]

From the figures shown, you could have profits of around £2k - £3k by the end of the tax year, on which you will be charged tax at 20% if you are a basic rate tax payer, or 40% if your total taxable income, including your salary, is more than around £42,000. On this level of profits you can certainly claim exception from Class 2 National Insurance.

You calculate your profits simply by adding up all your sales for the period and deducting all your costs - you can find a list of the sort of expenses you can claim at http://www.hmrc.gov.uk/incometax/relief-self-emp.htm

[towat]

You calculate your profits simply by adding up all your sales for the period and deducting all your costs

and adjusting for any stock in hand.

[mullet]

Hi Lescinskas,
I can help you if you wish, I have sent you a PM.
Kind regards

Is this an open forum, or a place to find new clients? Surely advice should be given in public responses (unless the matter is of a private nature of course).