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!
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