When is a hobby really a business?

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Ask yourself these questions

Then stand back and look at the big picture!

It may be clear or it may not!

Speak to someone who can give you an honest answer to what HMRC may feel is a dishonest trade!

Is your main motive to earn a profit?
Well for most people of course it is! But is it a trade? Read On
HMRC may deem your selling activity to be a business.

The number of transactions matter. If you repeat very similar transactions in a short period of time, this might be considered an indicator of trading.

What type and quantity of goods are you selling? Are you purchasing for resale on a regular basis and keeping stock in hand

If your online transactions are similar to an already existing type of business, such as retailers selling off old clothing stock or dealing in specialist collectables like toy soldiers, stamps etc , this may be used by HMRC as evidence that you are trading.

If you make or modify items before selling them, do you repair, alter or improve items to make them more saleable to make a profit

How did you carry out the sale? If you sold an item on a BUY IT NOW basis or for a set price you could be classed as a business.

If you borrowed money to buy items or set up in business this is a strong indicator of trading

The period of time between when you bought the item and sold it again will be looked at by HMRC. Any assets that are the subject of trade will normally, but not always, be sold quickly.

How did you acquire the item? Is it just old personal possessions or unwanted gifts if so you’re far less likely to be seen to be running a business when you go on to sell.

So sellers beware and if in doubt call the expert! She’s not on Ebay!

Lindsay Henson Ltd 07584 706664


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