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MornieG

HMRC on the lookout.............

Just picked this up on two other forums so just in case it applies to anyone on here BEWARE

'' HMRC are on the look out

I have it on good authority (the horse's mouth itself) that HMRC are currently targeting small 'hobby' businesses and the word 'craft' was one of the specific words they used. They are having a crackdown and looking at websites, selling platforms (etsy, ebay etc) and visiting craft fairs etc so if you are selling but not registered you really need to do something about it pronto or you could end up in trouble and with a fine. ''

Mo.XX
dpack

they should look at the crafty in the turks and caicos,bermuda,jersey,lichenstien etc etc etc etc rather than those at a fair but that would be a waste of time and effort.

the other thing is they announce such things to worry folk into paying protection money but only actually put minimum effort into making a few examples of hard working folk.

a few years back they went after a few semi pro ebayers but ebay and its users still thrive.

if your turnover can justify it forming a limited company will reduce your tax liability to next to nowt but even a sole trader can offset expenses against income if needs be.

if your turnover is less than the vat threshold they wont bother you and income needs to be proved so they are on shakey ground in practical terms.
tahir

Our industry is rife with dodgy traders, we've always traded at a huge disadvantage cos we don't fiddle. They could go for any sector and tidy things up but I can't believe it'd be worth their while to do the small crafty people, it would make no financial sense, especially as HMRC are under resourced already (unless this is a policy led thing that's given them mission specific funding?)
madcat

Typical, pick on the people who are trying to look after themselves a bit and ignore the mega rich who just help themselves to our money. Mad
Nick

It's not about money. It's a philosophy of this government.
Treacodactyl

It's not about money. It's a philosophy of this government.


Or it's just an unsubstantiated internet rumor? There's been a few targeted crackdowns over the years by various governments. And if you were to look at the laws introduced over the last decade or two I expect the current government has introduced more to crack down on the 'rich' than the previous one.
dpack

gideon's trust fund would be safe even if it was filled by some very clever accounting so they might well have Mad
Treacodactyl

A quick google doesn't find anything about a new crackdown but did throw up this PDF that may be of use: http://www.hmrc.gov.uk/factsheets/hometraders.pdf
Nicky Colour it green

I suspect the reason there is a rumour about re craft businesses is this is the first year you can submit returns based on cash basis rather than the accruals basis - to qualify for cash basis you have to be a small business - turnover under a threshold etc - eg craft businesses.

https://www.gov.uk/simpler-income-tax-cash-basis/overview

There is bound to be some confusion so maybe why HMRC are paying attention.
Nick

It's not about money. It's a philosophy of this government.


Or it's just an unsubstantiated internet rumor? There's been a few targeted crackdowns over the years by various governments. And if you were to look at the laws introduced over the last decade or two I expect the current government has introduced more to crack down on the 'rich' than the previous one.

Oh, without doubt, it's an unsubstantiated internet rumour; of course it is. That's why we're discussing it. Wink
Rob R

Typical, pick on the people who are trying to look after themselves a bit and ignore the mega rich who just help themselves to our money. Mad

Help themselves? Or provide what people want & receive money willingly from even the poorest in our society. As much as I'd like to pass the buck, if my craft items don't sell, it's because supply is higher than demand. That's why it's hard work, not because of a third parties tax arrangements.
Mistress Rose

I don't think any of us willingly pay top bankers millions of pounds that comes from our money, but we have to use banks; most of us get paid at least partly by cheques/direct etc. In fact if we insist only on cash, that is when HMRC start to get worried. We each have to make the most of why our business is different; in your case Rob, there are not too many people supplying what you are, but most people can't see the difference between your meat and supermarket stuff, especially as the supermarket stuff is regarded as cheap even if it isn't. It is often inedible too, but that is another story. Rob R

I wasn't talking about the meat side but the craft.

Big, sucessful businesses identy a need/want in the consumer and make that happen. Most craft businesses, on the other hand, identify something they can do and then try to sell that into an uncertain market, so it's always going to be an uphill struggle.

Thinking about my own craft side, I didn't approach it as 'other people have a need for Kerry Hill wool', I approached it as 'this wool is going to waste, I need to make use of it' when in reality the market doesn't care about that.
Mistress Rose

Thought you meant your meat Rob. Yes, it is a question of marketing the waste at an economic price. A couple of small producers I know; one a smallholding and the other an alpaca farm, get the stuff commercially spun and sell that. I assume they are able to sell it better than the fleeces.

This is also why some joineries are making pellets or compressed 'logs' out of their sawdust. Must admit that is a waste product we are trying to find a use for.

We do find that the utility side of our business, the firewood, does better financially than the craft side which is mainly charcoal and turned green wood products. We can sell the charcoal, but it is doing it economically that is the problem.
Nick

I'll bet. Putting a craft tag on what is, essentially, a commodity, will always be an uphill struggle. Nick

It's not about money. It's a philosophy of this government.

Or it's just an unsubstantiated internet rumor? There's been a few targeted crackdowns over the years by various governments. And if you were to look at the laws introduced over the last decade or two I expect the current government has introduced more to crack down on the 'rich' than the previous one.

From a tax accountant firm.

Quote:
We have seen a huge increase in enquiries in to Sole Traders and Small Businesses in particular, the enquiries tend to be to the point and relatively short, that is unless anything is uncovered which prompts further more detailed enquiries. There are no specific trends in terms of industry sector, geographical region or relationship to accountancy practice, simply a huge across the board increase in enquiry volumes.
Treacodactyl

If I google that the first thing that comes up is this: http://www.accountingweb.co.uk/press/hmrc-continue-attack-uk-tax-gap madcat

Think they're lookin If the wrong place, but as always it's hit the soft target and pick on the little guy. Nick

If I google that the first thing that comes up is this: http://www.accountingweb.co.uk/press/hmrc-continue-attack-uk-tax-gap

Well, yes. That's because that was the source.
Treacodactyl

If I google that the first thing that comes up is this: http://www.accountingweb.co.uk/press/hmrc-continue-attack-uk-tax-gap

Well, yes. That's because that was the source.

Just wondered why you didn't post the link, it gives a more rounded view of the story.
Nick

It made the salient point that empirically, no one sector appears to be being targeted. Treacodactyl

Sorry, I thought you were making the opposite point. Rob R

Think they're lookin If the wrong place, but as always it's hit the soft target and pick on the little guy.

Little guys aren't a soft target for tax; the little guys will cost more to investigate than they yield, unless they're seriously on the fiddle, but then they're no longer little guys. These rumours are nothing to worry about, unless you have something to worry about...
madcat

Nothing to worry about but if it costs so much to collect maybe HMRC had better start looking harder at the big boys. Mistress Rose

Sometimes it isn't about the money, it is about the government being seen to be doing something. Under Maggie, there was a big purge on 'sickness benefit cheats'. Everyone had to go through a massive form and most were then called to a medical. It cost millions, and I think they saved perhaps a few tens of thousands and caught a few cheats before the whole thing was discredited to the extent it was withdrawn.

In the case of HMRC, if they can be seen to be 'catching' a few thousand 'cheats' from small companies who then go bust because of the accountants fees, making a few hundred pounds for the Treasury having spend a few million, it can be paraded as a result.
vegplot

They're going to have their work cut out. Rob R

Well if they take out a few of the rogues it can only help keep genuine craft businesses going, because supply seems to be higher than demand. vegplot


Little guys aren't a soft target for tax;

They used to be (from someone who worked in HMRC once told me) as it was far easier to met annual targets by going for small traders than large corporates.
Nicky Colour it green

and little guys can't afford big solicitors Treacodactyl

Would you need a big solicitor? From a practical point (sorry) is it that hard for a 'craft' person to keep track of what tax the owe, pay it and quickly answer any query?

Are there any thresholds before you start paying tax? I.e. could you make up to 100 a year without having to declare anything or do you have to file a return even if you make just 1?
Nick

The theory is you're supposed to declare everything, but, the taxman can, and often does, advise you not to bother below a certain level. I'm not sure this level is official, or fixed.

But, a tax return is pretty simple to do without an accountant, and certainly without a solicitor, for small organisations.
Rob R

and little guys can't afford big solicitors

Then they should join a union, such as the FSB.
Nicky Colour it green



But, a tax return is pretty simple to do without an accountant, and certainly without a solicitor, for small organisations.

yes, tax return is simple - and HMRC are very helpful.

My point was they are likely to have better results targeting small businesses for inspection, because they wont (and don't) win against the big guns with their expensive lawyers, plus it is expensive.

Small businesses can be inspected within a day by one inspector - it's cheap and easy to do.

Last time I attended an inspection, in my capacity as bookkeeper/ wages clerk, he argued the vehicle owned by the company must be used for personal use some of the time. I argued back that everyone had their own cars and thus had no use for the company car. He conceded my point. He asked if the employees (2) received a christmas bonus. I admitted they got a bottle of wine and a turkey. He told me he hadn't heard that... and ignored it. He found a small mistake, we agreed to make amends in the next tax return, he was happy and left.
Nick

Oh, you're right. And the first line of investigation is likely to be a phone call or letter, which is more likely to be dealt with by a small outfit, especially those that are a bit rubbish at dealing with tax, rather than those attempting to avoid.

Large corporations throw them to the admin side, and allow them a slow death, or progress, with accountants and legal sides.

Going after thousands of small businesses probably makes financial sense.
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