I'm looking to start trading in the near future and have some tax concerns that I haven't been able to find answers to. If any of you can help, or point me in the right direction I would be much obliged =)
I've been collecting American comics for many years, on and off, and have accumulated a substantial collection. As any collector does, I buy and sell to improve my collection. As I understand it, this has no tax implications at this point as it is not done with the intention of making a profit(?)
However, given my experience in this maket I would now like to try my hand as a dealer. I intend to operate as a sole trader, will deal exclusively in second-hand goods, and will mostly be buying and selling online. I want to begin using part of my collection for my initial stock, and build up from there.
I have some specific questions below, but generally speaking... how do I keep what remains of my collection seperate from my business as far as the taxman is concerned?
Any advice on that point would be much appreciated. If anyone can answer any of the following specifics, even better =)
1. As far as designating part of my collection as being for business purposes, how do I do that? Am I right in thinking that I essentially 'sell' the goods to my business (ie. myself) at wholesale prices and then just count this as a business expense for tax purposes? Would I need a third-party valuation for this, or would HMRC take my own estimate in good faith? (It would be a few £k at wholesale prices - less than £5k.)
2. I will typically buy the comics in sets, or as whole collections. In many cases, I will want part of the lot for my private collection and part for stock. Presumably, if I buy a large collection for business purposes and want a handful of them for my private collection they would be classed as payment in kind at the resale value(?) But what about the other extreme, where I buy a lot for my private collection and take what I don't want for stock? It seems to me that the 'fair' thing to do in that case would be to treat it more like (1) above, but I have no idea what the law says. If I can treat the two cases differently, what about the intermediate cases?
I'm sure I'll remember more as soon as I've posted this, but that seems like more than enough for now =)
Thanks for looking!