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kinster kinster is offline
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Join Date: Sep 2003
Location: Leeds
Posts: 702
Register as Company/Self employed

Would it be advantageous for me to register wit the inland revenue as a company even though I was just buying and selling? Would it be good for me on the VAT and Tax front?
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Statler's Avatar Statler Statler is offline
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Hi,

You must register with the Inland Revenue within three months of commencement of trading. Further info can be found at:

http://www.inlandrevenue.gov.uk/startingup/index.htm
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Neoflare Neoflare is offline
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Join Date: Feb 2004
Location: London, England
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What do you think your turnover would be.

I believe if it is a home business, like betterware, or kleenze, Amway etc. then it doesn't really apply.

What are you thinking about doing?
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kinster kinster is offline
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I'm buying and selling goods. So am wondering how registering as a self-employed business would be tax advantage to me. It'll enable me to get access to places like Makro etc
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Netcomm UK Netcomm UK is offline
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Doesn't matter whether you're Kleeneze or whoever, if you are making money then it must be declared to the IR.

If you have a full-time job too, then this should be done by registering as self-employed, and the two can work side by side. You will then get a tax return every year to notify of your profit etc.
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kinster kinster is offline
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Hi netcomm

So are you saying that the majority trading on Ebay on and off should register with the IR?

Regards
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James Smith's Avatar James Smith James Smith is offline
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I thought we did this discussion yesterday?

If you trade and make an income you should be registering with the Inland Revenue, and paying your taxes. Period.

If you are selling off your own second goods via ebay or a carboot sale this does not apply, as this is not a trade.

If you buy with the intent to sell on (ie what kermey is doing) you become a trader and therefore this is in issue. I actually have a couple of ebay traders on my books, so not all of them are breaking the law.

I donít doubt that the IR will do a sweep of the traders on ebay periodically, just the same as they sweep lettings agents for those who think they donít need to declare their rental income, and do a sweep of the small adds in the local paper for those tradesman for which donít think the law applies to them.

I get a constant trickle of people coming to me having been caught for undeclared income going back typically around 3-5 years, so the IR are certainly active in catching people defrauding the tax payer.

What % they get I couldnt say, but it would seem they get round to most people eventually.
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lippyboy lippyboy is offline
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Join Date: Apr 2004
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Dont regsiter

Its silly just saying register if you dont need too..... cause you will
just end up paying taxes.

I have a friend who is in business but his earnings are very limited i.e. the buisiness makes a loss.

He has have been forced to look for work until the business can support him. He is currently claiming job seekers, whilst doing his job search and working on the business which is VAT registered.

He has not registered as self-employed, hence he is still able to claim job seekers. He wants to get off job seekers and either find a job or make a success of the business and register as self-employed.

Also he has a VAT inspection - will that uncover the fact that he has not regsistered as self-employed? And would that mean he would need to re-pay the job seekers? Even though without it he wouldnt have been able to eat!! Seems unfair to me...
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hollyyetmore hollyyetmore is offline
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So what you're saying is, and forgive me if I've misinterpreted this, don't register with the inland revenue, because if you do you will be taxed?!

Can I just say to anybody reading this please don't follow that advice! It's a lot more complicated than that, if you register as self employed you will pay some tax on earnings, but not if you don't earn anything! There are also various things you can claim back I believe (I have a Ltd co so I'm shaky on self-employment) but to avoid it and then earn 'cash in hand' esp. if you claim benefits as well could land you in a hell of a lot of hot water and is frankly greedy, irresponsible and unprofessional.
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lippyboy lippyboy is offline
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Join Date: Apr 2004
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Slef employed? Or Income Support

Im not saying you should never register as self employed if you are making money, But if you are claiming benefits then you should NOT regsiter as self-employed because then you will no longer be entitled to benefits.

The best thing Kinster should do is set up a company. That way she does not need to regsiter as self-employed and can still claim benefits.

If she also claims VAT, Im not sure she can still get away with claiming benefits (if thats what she wants) but I dont think a VAT inspection uncover the fact that she was claiming?

So thats my advice. Set your self up as a company that is VAT registered... This way you can get the benefits of claiming VAT back, but also continue to claim income support until the business is making enouth money so you dont need to. I mean why shouldnt she get income support until whilst the business isnt making any money... If she can also claim VAT back then all the better I would have thought...
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hollyyetmore hollyyetmore is offline
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I'm confused, I didn't realise Kinster was on benefits. If I was her I'd call the inland revenue anonymously and get some advice on what is/isn't legal, that way you can play safe
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James Smith's Avatar James Smith James Smith is offline
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I think you will find Lippy (nice sock by the way) doesnít have a clue what they are talking about.

The first stupid thing (there are several) is that losses are actually quite useful things to have, and should certainly be declared as they may redcue a future tax bill.

The second is to fail to understand that the government agencies do actually talk to each other (ie you will get found out and benefit fraud tends to be taken rather seriously) and the best bit is that even the briefest discussion with your dole office would reveal the "New Deal" which is there to help you start up your own business. You may have seen the posters when you signed on.

I think they can even help with start up grants, as well as maintaining your benefit for 6 months or so while you start your small business.

So your solution is to snub all this help, and be clever by erm digging yourself in a big hole.

Great idea.
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Netcomm UK Netcomm UK is offline
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Agree with James,

I am a director of a ltd company yet as I did not pay myself much money when I started, i was entitled to claim benefits via Tax Credits. My brother who is self employed was eligable too.

So Lippy, if you don't know what you're on about with something so important, please don't bother as bad advice can lead to alot of trouble and financial hardship if the IR catch up with you.
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lippyboy lippyboy is offline
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Join Date: Apr 2004
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Self employed

Ok, I didnt know you could claim beenfits whislt still being self-employed or a director of a company? Im not sure you are right about this. I thought you would have been either in busienss or on benefits? Didnt know there was this grey area, where you could be on benefits (about £50 a week or something) and also running a business/company?! I think you are wrong.

Also Im not sure I agree with James, I dont think that the benefits office and say the VAT inspector talk to one another? Well, not as standard anyway, If you get asked for a VAT inspection (once every two yrs) they are not going to ask you if you ave regsitered as self-employed!! They care about VAT returns not wether you are signing on or not!

Bottom line is this, if you are not making money, you need to live, so claim benefits, but keep the business going as benefits is no long term furture. Also, become VAT registered as 17.5% soon adds up!

Also, I agree with James, losses can be written off against future profits, which is why I said form a company, to keep hold of those losses! - and also claim benefits whilst it doesnt support you!
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Adam Adam is offline
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Join Date: Jun 2002
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Re: Self employed

Quote:
Originally posted by lippyboy
Also, become VAT registered as 17.5% soon adds up!
This is not a magical way of getting an extra 17.5%

If you are NOT VAT registered, you buy something at £10 and pay the VAT is becomes £11.75. You then stick on £10 profit and sell it to a non registered man in the street for £21.75.

If you ARE VAT registered, that same item effectively now only costs you £10. If you then stick your £10 profit in you will sell it at £20+vat or £23.50 so now your "man in the street" has to pay you an extra £1.75. I know where I would rather go!

The VAT thing only works if you are part of a larger B2B supply chain.

While the VAT man may not ask you how your family is or look through your holiday snaps while he is turning your office upside down (another down side to this wonderful idea of registering for VAT) there is communication between government departments. You will be caught for doing anything illegal. HMCE and the IR also check forums like this and a quick call to Shell means they can get everything you have ever said on here and any details your may have provided at registration.

You also need to present a case for registration when turnover is £2.87 a year!
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