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Where Taxpayers and Advisers Meet

Sole Trader Accounts Question

jokerman
Posts:19
Joined:Fri Dec 22, 2017 9:26 pm
Sole Trader Accounts Question

Postby jokerman » Mon Jan 24, 2022 9:15 am

Hi - hope somebody can help....

My daughter has started selling quite a lot on ebay etc : clothes, shoes etc. And recently has had to complete a tax return declaring sole trader income.

For her accounts, at the point that something sells, she adds to her accounts and lists the original purchase price as an expense. i.e. she is not using the original purchase date when calculating the profit - rather only including the purchase in the accounts at the point that she sells something. She prefers to do this as she buys a lot of stuff for personal use, and if she doesn't like it then she sells it on. This method keeps things simple. It's like she's using the cash accounting basis but the stock purchase date is always treated as the sale date.

But is is acceptable to HMRC? In my mind I'm thinking it's just as if she is personally making the purchases and selling them to her sole-trader company at the point they get bought by somebody.

Thanks!

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Sole Trader Accounts Question

Postby bd6759 » Tue Jan 25, 2022 1:40 am

It’s not correct. But are we talking significant sums?

jokerman
Posts:19
Joined:Fri Dec 22, 2017 9:26 pm

Re: Sole Trader Accounts Question

Postby jokerman » Tue Jan 25, 2022 3:38 pm

Profit 5K this year, maybe would be 10K or higher if things go well....

Thks.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Sole Trader Accounts Question

Postby bd6759 » Wed Jan 26, 2022 1:43 am

That is not trivial. It’s also improbable that she buys £10k+ worth of goods for her own use.

Looking ahead to MTD it’ll need done properly. May as well start now.


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