Anyone been investigated by HMRC for driveway car selling?
Discussion
As a car enthusiast I regularly change my cars. Most of the time I loose money, but occasionally I break even and more recently I’ve made a bit.
Anyway since COVID I have had a lot more free time to work on my cars, and that combined with a crazy used car market has meant I have made money on all 7 of the cars I’ve owned this year. It wasn’t really my intent to do this, it just sort of happened. Most of the cars I used as my daily driver for a short time, but a few I just ended up fixing up and deciding they weren’t for me and selling them on.
I have since read numerous threads on here talking about the legalities of this. But I wanted to know, has anyone actually been investigated by HMRC for this kind of low level car buying and selling? If so, what sort of fine did you get? I can’t see it being worth the time of HMRC to investigate something like this?
The reason I ask is I’ve got a prune of a neighbour who doesn’t like the occasional noise of me working on my cars (despite me helping him out numerous times), I am worried he will try and grass me up to HMRC
To clarify on this, I am talking about 6/7 cars, one at a time and being used mainly as my personal car for a month or two. Cars are sub £10k with £4/5k profit aver the whole year.
Any real experience with HMRC would be great to hear!
Anyway since COVID I have had a lot more free time to work on my cars, and that combined with a crazy used car market has meant I have made money on all 7 of the cars I’ve owned this year. It wasn’t really my intent to do this, it just sort of happened. Most of the cars I used as my daily driver for a short time, but a few I just ended up fixing up and deciding they weren’t for me and selling them on.
I have since read numerous threads on here talking about the legalities of this. But I wanted to know, has anyone actually been investigated by HMRC for this kind of low level car buying and selling? If so, what sort of fine did you get? I can’t see it being worth the time of HMRC to investigate something like this?
The reason I ask is I’ve got a prune of a neighbour who doesn’t like the occasional noise of me working on my cars (despite me helping him out numerous times), I am worried he will try and grass me up to HMRC
To clarify on this, I am talking about 6/7 cars, one at a time and being used mainly as my personal car for a month or two. Cars are sub £10k with £4/5k profit aver the whole year.
Any real experience with HMRC would be great to hear!
Edited by zxc23 on Monday 24th January 20:14
If said neighbour does dob you in, HMRC may well be interested. So it's important to keep records, including what you've spent on parts, etc.
But normally people lose money on cars, and if HMRC were to try & tax the occasional profit, they'd have to give you tax relief on your losses. And this doesn't happen!
As always, that's the simple story. If you end up as a trader, then HMRC will want their share. Just when a profitable hobby becomes a business can be the subject of "negotiations", where HMRC have the upper hand. So keep records & monitor just how much real profit you are making, after allowable costs - parts, adverts, electricity, consumables, cost of disposal of junk, etc, etc. And the first £1,000 is tax-free.
It might be worth considering if he'll also dob you in the the council for trading from domestic property ?
But normally people lose money on cars, and if HMRC were to try & tax the occasional profit, they'd have to give you tax relief on your losses. And this doesn't happen!
As always, that's the simple story. If you end up as a trader, then HMRC will want their share. Just when a profitable hobby becomes a business can be the subject of "negotiations", where HMRC have the upper hand. So keep records & monitor just how much real profit you are making, after allowable costs - parts, adverts, electricity, consumables, cost of disposal of junk, etc, etc. And the first £1,000 is tax-free.
It might be worth considering if he'll also dob you in the the council for trading from domestic property ?
Mo28 said:
Think the limit for a private individual to buy and sell cars is 8 in a year
I'm fairly sure the legal test is whether the purpose of buying the car is to sell for a profit, and that it's carried on habitually, but not any fixed number of cars per year.If you were super-rich and bought yourself a new Roller or Ferrari each month, selling each one on nearly-new for a loss, I don't think anyone would investigate that.
Having one car at a time, registering them in your own name, insuring them on a normal private car insurance policy, selling them from your house, and putting miles on each car would all tend to point towards acting as a private individual who likes a change.
Making a profit, putting them up for sale as soon as you buy them, and buying broken cars and fixing them for sale, and it being your main or only source of income, would all tend to point towards it becoming a business.
Personally I strongly doubt HMRC would get involved, they are understaffed and will, I'm fairly sure, be focusing on the bigger fish where more tax money is being lost than at most a few hundred quid in your case. If anything the council or Trading Standards might take an interest, for using your house as a business and potentially 'masquerading' as a private seller in order to cheat your buyers out of their consumer rights.
If it were me I'd carry on as you are and not worry, I don't think you're suddenly going to get in trouble, likely you'd be 'advised' not to continue or perhaps have to refund a dissatisfied customer at worst.
zxc23 said:
As a car enthusiast I regularly change my cars. Most of the time I loose money, but occasionally I break even and more recently I’ve made a bit.
Anyway since COVID I have had a lot more free time to work on my cars, and that combined with a crazy used car market has meant I have made money on all 7 of the cars I’ve owned this year. It wasn’t really my intent to do this, it just sort of happened. Most of the cars I used as my daily driver for a short time, but a few I just ended up fixing up and deciding they weren’t for me and selling them on.
I have since read numerous threads on here talking about the legalities of this. But I wanted to know, has anyone actually been investigated by HMRC for this kind of low level car buying and selling? If so, what sort of fine did you get? I can’t see it being worth the time of HMRC to investigate something like this?
The reason I ask is I’ve got a prune of a neighbour who doesn’t like the occasional noise of me working on my cars (despite me helping him out numerous times), I am worried he will try and grass me up to HMRC
To clarify on this, I am talking about 6/7 cars, one at a time and being used mainly as my personal car for a month or two. Cars are sub £10k with £4/5k profit aver the whole year.
Any real experience with HMRC would be great to hear!
We're only 3 1/2 weeks into the new year, and you've already gone through 7 cars?Anyway since COVID I have had a lot more free time to work on my cars, and that combined with a crazy used car market has meant I have made money on all 7 of the cars I’ve owned this year. It wasn’t really my intent to do this, it just sort of happened. Most of the cars I used as my daily driver for a short time, but a few I just ended up fixing up and deciding they weren’t for me and selling them on.
I have since read numerous threads on here talking about the legalities of this. But I wanted to know, has anyone actually been investigated by HMRC for this kind of low level car buying and selling? If so, what sort of fine did you get? I can’t see it being worth the time of HMRC to investigate something like this?
The reason I ask is I’ve got a prune of a neighbour who doesn’t like the occasional noise of me working on my cars (despite me helping him out numerous times), I am worried he will try and grass me up to HMRC
To clarify on this, I am talking about 6/7 cars, one at a time and being used mainly as my personal car for a month or two. Cars are sub £10k with £4/5k profit aver the whole year.
Any real experience with HMRC would be great to hear!
Presumably you meant in 2021?
Keypad said:
If said neighbour does dob you in, HMRC may well be interested. So it's important to keep records, including what you've spent on parts, etc.
But normally people lose money on cars, and if HMRC were to try & tax the occasional profit, they'd have to give you tax relief on your losses. And this doesn't happen!
As always, that's the simple story. If you end up as a trader, then HMRC will want their share. Just when a profitable hobby becomes a business can be the subject of "negotiations", where HMRC have the upper hand. So keep records & monitor just how much real profit you are making, after allowable costs - parts, adverts, electricity, consumables, cost of disposal of junk, etc, etc. And the first £1,000 is tax-free.
It might be worth considering if he'll also dob you in the the council for trading from domestic property ?
If buying and selling every few months though, you can't make a living from that. Has anyone ever decided / agreed how often you need to change your car to become a "trader"? Once a month? Once a week?But normally people lose money on cars, and if HMRC were to try & tax the occasional profit, they'd have to give you tax relief on your losses. And this doesn't happen!
As always, that's the simple story. If you end up as a trader, then HMRC will want their share. Just when a profitable hobby becomes a business can be the subject of "negotiations", where HMRC have the upper hand. So keep records & monitor just how much real profit you are making, after allowable costs - parts, adverts, electricity, consumables, cost of disposal of junk, etc, etc. And the first £1,000 is tax-free.
It might be worth considering if he'll also dob you in the the council for trading from domestic property ?
TX.
Back in the 1990's I had 12 cars in a year.
Was buying, running, repairing, selling, mainly minis and metros but also changed my "good" car and the car that my wife was using.
Was doing it as a hobby, learning to weld & paint while not losing anything in depreciation.
Quite easy to go through 7 in a year.
Good car - change
Station car - change
Wifes car - change
There's 6 for a starter.
Was buying, running, repairing, selling, mainly minis and metros but also changed my "good" car and the car that my wife was using.
Was doing it as a hobby, learning to weld & paint while not losing anything in depreciation.
Quite easy to go through 7 in a year.
Good car - change
Station car - change
Wifes car - change
There's 6 for a starter.
Thank you all. I think that there are enough people on these forums that have done a similar thing to myself over the years, but I’ve searched high and low and have yet to hear any stories where HRMC have investigated and subsequently taken action. After all, there are far richer pickings in takeaway restaurants and tradesmen (many of whom seem to deal largely in cash)
I believe any action they are able to take would have to be proportionate as well.
When I was running my business I got randomly inspected for VAT. The guy went through my books with a fine tooth comb and found just one thing to complain about which were some alloy wheels which had been refurbished and VAT claimed back but they were on the shelf waiting for an as yet unknown customer.
They hadn't been paid for by anyone meaning I was in benefit at the precise moment they inspected! The fine for that wasn't much different to the owed VAT and they added it onto next quarter bill. I guess depending on the circumstances they could be vindictive but they're not going to hang you for the levels you're talking about.
Personally I really wouldn't worry about it.
If you are from the HMRC yourself then you'll no doubt have a better grasp of the situation than anyone on here.
When I was running my business I got randomly inspected for VAT. The guy went through my books with a fine tooth comb and found just one thing to complain about which were some alloy wheels which had been refurbished and VAT claimed back but they were on the shelf waiting for an as yet unknown customer.
They hadn't been paid for by anyone meaning I was in benefit at the precise moment they inspected! The fine for that wasn't much different to the owed VAT and they added it onto next quarter bill. I guess depending on the circumstances they could be vindictive but they're not going to hang you for the levels you're talking about.
Personally I really wouldn't worry about it.
If you are from the HMRC yourself then you'll no doubt have a better grasp of the situation than anyone on here.
You really have nothing to fear assuming the 7 cars are 2021 not 2022.
Trading is a very grey area there are many aspects to consider and there are many cases where folks were simply hobbyists or enthusiasts like yourself with cars and not traders despite them making a profit which may or may not be the intention of selling the cars in the first place.
Aspects the Revenue may be interested in include do you have trade insurance or other trade premises or not, are the cars sold advertised by you as a trader with say a warranty, are the cars registered in your name or not, are they similar models, do you have anotger full or part time occupation, and do you regularly or historically buy from a car auction via a trade account and how many cars you have sold in previous years.
As is the case with many potential businesses the Revenue will really not be interested in someone such as yourself who has sold only 7 cars over the year as they are short staffed and really have bigger fish to fry.
Trading is a very grey area there are many aspects to consider and there are many cases where folks were simply hobbyists or enthusiasts like yourself with cars and not traders despite them making a profit which may or may not be the intention of selling the cars in the first place.
Aspects the Revenue may be interested in include do you have trade insurance or other trade premises or not, are the cars sold advertised by you as a trader with say a warranty, are the cars registered in your name or not, are they similar models, do you have anotger full or part time occupation, and do you regularly or historically buy from a car auction via a trade account and how many cars you have sold in previous years.
As is the case with many potential businesses the Revenue will really not be interested in someone such as yourself who has sold only 7 cars over the year as they are short staffed and really have bigger fish to fry.
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