This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

£1,000 trading income question

throwaway123
Posts: 3
Joined: Sat May 11, 2019 1:11 pm

£1,000 trading income question

Postby throwaway123 » Sat May 11, 2019 1:20 pm

Hi there,

First time posting, hopefully I'm in the right place.

A couple of years ago I bought and sold video game consoles with the view to make a profit. The whole buying and selling was done over the course of a few weeks, with gross income of £4,300 and a profit of £950.00.

I looked into this at the time, admittedly not enough, and assumed that I qualified for micro entrepreneurship due to having profits of less than £1k, but having picked up on another article today I now understand that even though I would've qualified for not paying tax, I should've filed a return anyway due to the fact my gross income exceeded £1k.

I've never filed a return before but I assume this can be done now and backdated.

What sort of penalties can I expect for this? Should I check with a chartered accountant or get in touch with HMRC prior to doing it, to try and achieve the best result. I've kept all of the info regarding the transactions, so I am quite confident in my ability to replicate the transactions etc.

Any advice is much appreciated.

Thanks.

D&C
Posts: 61
Joined: Thu Dec 22, 2016 10:04 pm

Re: £1,000 trading income question

Postby D&C » Sun May 12, 2019 8:50 am

Which tax year was the trading in?

And why do you think no tax would be payable? What have you been living in?

D&C
Posts: 61
Joined: Thu Dec 22, 2016 10:04 pm

Re: £1,000 trading income question

Postby D&C » Sun May 12, 2019 8:52 am

Tax return penalties are because you have failed to file a return when asked to. If you haven't been asked to file one there can be no penalty. Providing, if you are asked to file one, you do so within 3 months of HMRC sending you the notification.

There can be other tax owed related penalties but at this stage there is insufficient information to know if that is an issue or not.

D&C
Posts: 61
Joined: Thu Dec 22, 2016 10:04 pm

Re: £1,000 trading income question

Postby D&C » Sun May 12, 2019 8:53 am

Living in should have been living on!

throwaway123
Posts: 3
Joined: Sat May 11, 2019 1:11 pm

Re: £1,000 trading income question

Postby throwaway123 » Sun May 12, 2019 9:36 am

Tax return penalties are because you have failed to file a return when asked to. If you haven't been asked to file one there can be no penalty. Providing, if you are asked to file one, you do so within 3 months of HMRC sending you the notification.

There can be other tax owed related penalties but at this stage there is insufficient information to know if that is an issue or not.
Thanks D&C.

The first of these transactions were on the 31st Oct 2016 and as before stated, only went on for a few weeks - so tax year ending April 2017.

I felt I didn't owe taxes due to the £1,000 trading income principle, that was my logic at the time, I misinterpreted the income for profit - obviously a mistake.

On further reading I've found this page: https://www.gov.uk/undeclared-income - which suggests:
Declare the income on a tax return
If you’re already registered for Self Assessment but have not declared all your income, you can make a change to your return.

If you do not usually send a tax return, you can register for Self Assessment to declare any income you have not paid tax on from the last 4 years. You’ll need to fill in a separate tax return for each year.

You’ll get a letter telling you what to do next after you’ve registered.
This would read to me as though I still have time to declare this income?

Thanks again.

D&C
Posts: 61
Joined: Thu Dec 22, 2016 10:04 pm

Re: £1,000 trading income question

Postby D&C » Sun May 12, 2019 10:30 am

Yes you have time to declare it and far better for you to come forward than HMRC to catch up with you first.

But you have some misunderstandings about the trading allowance.

This would be a good place to start. In particular look at when this started. And when your business started.

https://www.litrg.org.uk/tax-guides/self-employment/what-trading-allowance

throwaway123
Posts: 3
Joined: Sat May 11, 2019 1:11 pm

Re: £1,000 trading income question

Postby throwaway123 » Sun May 12, 2019 11:37 am

Yes you have time to declare it and far better for you to come forward than HMRC to catch up with you first.

But you have some misunderstandings about the trading allowance.

This would be a good place to start. In particular look at when this started. And when your business started.

https://www.litrg.org.uk/tax-guides/self-employment/what-trading-allowance
Ah yeah, I understand where I'm going wrong.

With my expenses being so high and my profit margin relatively low, it's best for me to not go with the trading allowance at all.

Am I still likely to be in any sort of trouble with the HMRC with the added information provided above? I've registered for self assessment and advised them of the period of time that it covers.


Return to “Income Tax”