Adventures in trade

Readers are reminded that if you profit from a hobby – sell what you produce on a regular basis – you may attract the attention of HMRC.

If your annual sales (income before any costs are deducted) are below £1,000 you will pay no tax as you can claim exemption under the tax-free trading income allowance. If your annual gross income exceeds £1,000 you may need to submit details to HMRC by filing a tax return.

If you doubt HMRC’s resolve in tracking down and enforcing their interest in miscellaneous income streams, consider the plight of tax evading dog breeders outlined in a recent HMRC press release. They said:

HMRC set up the taskforce in October 2015 after discussions with animal welfare groups suggested tens of thousands of puppies were being reared in unregulated conditions and sold illicitly every year.

Officers uncovered fraudsters selling puppies on a mass scale and for a huge profit, but because of the underground nature of the activity – failing to declare their sales.

Using a full range of civil and criminal enforcement powers, HMRC has recovered £5,393,035 in lost taxes from 257 separate cases since the formation of the taskforce.

Of those breeders and traders targeted, they include:

  • two unconnected puppy breeders in the west of Scotland who were handed tax bills of £425,000 and £337,000
  • a puppy breeder in the Midlands who was former Crufts judge, given a £185,000 bill
  • a dealer in Northern Ireland told to pay £185,000 in tax
  • a Somerset puppy breeder was given a £114,000 bill
  • a puppy dealer in the east of Scotland was handed a tax bill in excess of £400,000
  • a Swansea puppy breeder was given a £110,000 tax bill

Several arrests have been made in relation to the taskforce’s work over the past four years.

Whilst these cases involve trading on a large scale, it does demonstrate HMRC’s resolve to bring income from “hobby” type trades into tax. A further example would be buying and selling goods on the internet on a regular basis.

If you have recurring income from sources that are presently not reported to HMRC, and you want to check and see if you need to advise HMRC, please call for more information. It may not be necessary to make a return, but the criteria that determine when tax needs to be paid are fairly involved and will vary on a case by case basis.

Latest Blog
25
Apr

High risk and all eggs in one basket

The “boomer” population was used to the idea that you could have a job fo...

Read More
23
Apr

More corporate red tape

We are still waiting for the government to introduce secondary legislation that will ...

Read More
18
Apr

New employment protections

The following changes were enacted from 6 April 2024. These changes apply to England,...

Read More
16
Apr

Opening up small company reporting

Companies House are working on detailed changes that will require small and micro siz...

Read More