As part of their modernised, proactive approach, HMRC is actively searching the internet for evidence of traders who are consistently selling goods on eBay and not declaring their income. It’s not just ebay – if you have affiliate income or are a car boot regular they could be after you too.
If you are selling your own private possessions - for example clearing out the attic – you will not be trading.
You will be considered to be trading if you habitually buy and sell goods on eBay or at car boot events.
HMRC use a set criteria known as the badges of trade when assessing if you are in business or not.
- An intention to make a profit supports trading.
- The number of transactions involved – systematic and repeated transactions support trade.
- The nature of the goods sold – are the goods only capable of being turned to advantage by being sold? Or do they yield income, or give enjoyment through pride of posession?
- Existence of similar trading transactions – was this a one-off transaction or part of a pattern that suggests trading?
- Changes to the goods – were the goods repaired, modified or improved to sell them more easily?
- The way the sale was carried out – were the goods sold in a way that indicates trading, or to raise cash in an emergency?
- The source of finance – was money borrowed to buy the goods? Were any profits to be used to repay the loan?
- Interval of time between purchase and sale – goods being traded are usually bought then sold quickly.
- Method of acquisition of the goods – goods acquired by an inheritance, or as a gift, are less likely to be the subject of trade.