• The above Banner is a Sponsored Banner.

    Upgrade to Premium Membership to remove this Banner & All Google Ads. For full list of Premium Member benefits Click HERE.

  • Join The Silver Forum

    The Silver Forum is one of the largest and best loved silver and gold precious metals forums in the world. Join today for FREE! Browse the sponsors topics (hidden to guests) for deals and offers, check out the bargains in the members trade section and join in with our community reacting and commenting on topic posts. If you have any questions whatsoever about precious metals collecting and investing please join and start a topic and we will be here to help with our knowledge :) happy stacking. 

BackyardBullion

Selling Silver & Gold as a hobby or a trade - it really matters so take heed!

Recommended Posts

anyway to work in the VAT margin scheme on "collector" silver?

Would the Yales be classified as bullion despite a premium or "collector" coins as they are also part of a set where the margin scheme may apply?

 

Just rambling as I dont know the ins and outs of tax, probably like 99% of the country lol

 

Edited by mr-dead

Share this post


Link to post
Share on other sites
Just now, mr-dead said:

anyway to work in the VAT margin scheme on "collector" silver?

Would the Yales be classified as bullion despite a premium or "collector" coins wher the margin scheme may apply?

 

Just rambling as I dont know the ins and outs of tax, probably like 99% of the country lol

 

Proving that the coins qualify for the margin scheme is the difficult bit. You have to also have immaculate records and purchase receipts to show that they are indeed second hand. 

There is also convoluted advice on the .GOV website saying that any items you were charged VAT for or are precious metals are not able to be sold under the margin scheme. 

51388472_MarginScheme.jpg.c089478b58717ce9bca390957b81cfd7.jpg

There must be a way around this as we see UK Dealers using this scheme (occasionally). Perhaps it is only occasionally because it is so hard to prove!

Tax man always gets their due!

Share this post


Link to post
Share on other sites

Good article on Chards:

https://www.chards.co.uk/blog/special-scheme-silver/259

 

VAT Margin Scheme on Silver

The British government introduced a VAT margin scheme which taxes the difference between the price that the dealer has paid for the item and what it is then sold for. This can be applied when we sell second-hand silver, medallions and coin sets which are not legal tender.

 

Who said Britannia's + Queens beasts were the way to go lol

Share this post


Link to post
Share on other sites

What’s your interpretation of the rules regarding reporting? I make it out as having to report when reaching £1000 turnover BUT only having to pay when exceeding £1000 profit

Sounds a bit stringent but there it is. Sell a one ounce coin for £1000 even though it was bought for £1000, no gain but still have to report it- no profit, no tax to pay

sell for £2000 same, still have to report, £1000 gain, uses all the allowance. No tax to pay

sell for £2005 have to report, £1005 gain and have to pay income tax on £5

(only applied to a traded coin bought and sold quickly ad you describe)

https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income

the link above refers to gross income from trading is £1000 before becoming reportable but the profitable allowance is still £1000 before any tax is due. Or have I misinterpreted?

Edited by Elements

Share this post


Link to post
Share on other sites
On ‎09‎/‎04‎/‎2019 at 14:09, BackyardBullion said:

But, there is a separate stack of metals which we are holding as (in our minds) capital assets. We intend to sell them well into the future. We are carefully looking at the badges of trade and have to take special precautions in terms of record keeping, purchasing records being especially important. The goal here is that we will be above reproach if we get accused of selling a private asset as a private asset and not as a business asset. 

I suspect you are going to have to be very careful indeed.  If you sell these items while you are still trading coins/metal as "business assets" you are going to have a very hard time convincing the taxman these other coins/metal are not also business assets and sold as part of that trade.  It may be here that some form of incorporation may come in handy - put the business assets into the company and keep the personal ones in your own name.

Share this post


Link to post
Share on other sites
6 hours ago, Elements said:

the link above refers to gross income from trading is £1000 before becoming reportable but the profitable allowance is still £1000 before any tax is due. Or have I misinterpreted?

Misinterpreted i think, its gross income not profit or net income for a reason. The allowance is a shelter from reporting small amounts of income not from income tax per se.  The purpose is so HMRC doesn't have to deal with lots of small uneconomic returns, or account for small amounts that aren't reported anyway.  The allowance means you simply dont report the first £1k from trading (and property).

So, assuming you are falling under trade, you sell 1oz gold for £1001 you should declare that and pay income tax on the £1.  

Not trading and it comes under CGT.  I can see how it can get very complex for traders of assets such as BYB to differentiate the two, but this must already be covered by precedents in shares, art, property where some assets are regularly traded while others held longer term.

Edited by Martlet

Share this post


Link to post
Share on other sites

Forum hearsay, web links and personal opinions is not how you deal with your personal tax affairs

The fee a VERY GOOD professional accountant charges you will ALWAYS be far less than savings he/she's skills gets for you or they ain't doing their job right 

CGT is such a misunderstood thing, i would guess 98% of UK folk here on forum wont EVER have to have any worry of it, ever, it is based on the profits you make, between what you buy and what you sell at.  Buy at £19 sell at £20 - £1 is your CGT 

Making a £1 profit, you have an allowance of £12k next year to use.  Whoever is sat on 12,000oz (aka nearly £240,000 of silver @ £20oz) they HAVE to sell at a +£1 profit is lacking vision how to liquidate their stack. CGT is based across all investments of course, stocks, shares, interest, dividends, profits etc

wife/spouse CGT yearly allowances (sell x12000 oz this year and x12,000 next year) 'colourful gifts" to family/friends, buried/hidden booty for years to come, left in safe deposit for your estate when you're gone, anon paypal/ebay accounts (aspkins.com) to get rid via ebay in various countries, cash for gold buyers, local auctioneers, forum swaps from silver to gold, facebook collectors groups, personal meets, coin fair over counter dealer sales, gumtree/spock/local FB groups = face to face sales, USA travel to dispose at pawn shops, ID not required selling small amounts per deal in UK to name but just a few things

Let your creative mind run riot.....................

 

Share this post


Link to post
Share on other sites

i use the £1000 turnover allowance and as soon as £1000 is hit i flip it over to another entity. This is a legal allowance for each person. You could use parents, in-laws, the wife, sibs if you can trust them and they aren't using their £1000.

If you create a limited company it would make it easier to separate your business from hobbyist activities. Your business is hand poured silver. Stick to that. If it is not hand poured silver it is not BYB Limited activities. You and wife have your  personal CGT allowances. There is UK coinage with no CGT liabilities. This could be applied to hobbyist activities.

The thing is i get the impression you do not have a lot of experience of this sort of thing, it scares you and you would rather pay a bit too much tax and sleep easy at night. i do think you can split hobby activities from business with a limited company (which is not a big deal - honest). i had a PAYE job and 'private' work. i used to push the private work through a company - i slashed my tax and i set up the company before i really needed to. My accountant never suggested the various schemes i ran but would put them on the form and we ended up cutting the bill significantly. You need to think ahead. i have never been scared of the tax people and see it as a game and my duty to pay as little tax as possible.

i think you are getting unnecessarily worried - you need an accountant if you aren't conversant with the tax system but you also need to read around this stuff b/c i have found accounts are generally not very inventive and i like being inventive. Being inventive saved me £10's thousands.

Edited by sixgun

Share this post


Link to post
Share on other sites
6 hours ago, sixgun said:

i use the £1000 turnover allowance and as soon as £1000 is hit i flip it over to another entity. This is a legal allowance for each person. You could use parents, in-laws, the wife, sibs if you can trust them and they aren't using their £1000.

If you create a limited company it would make it easier to separate your business from hobbyist activities. Your business is hand poured silver. Stick to that. If it is not hand poured silver it is not BYB Limited activities. You and wife have your  personal CGT allowances. There is UK coinage with no CGT liabilities. This could be applied to hobbyist activities.

The thing is i get the impression you do not have a lot of experience of this sort of thing, it scares you and you would rather pay a bit too much tax and sleep easy at night. i do think you can split hobby activities from business with a limited company (which is not a big deal - honest). i had a PAYE job and 'private' work. i used to push the private work through a company - i slashed my tax and i set up the company before i really needed to. My accountant never suggested the various schemes i ran but would put them on the form and we ended up cutting the bill significantly. You need to think ahead. i have never been scared of the tax people and see it as a game and my duty to pay as little tax as possible.

i think you are getting unnecessarily worried - you need an accountant if you aren't conversant with the tax system but you also need to read around this stuff b/c i have found accounts are generally not very inventive and i like being inventive. Being inventive saved me £10's thousands.

@sixgun Flipping over to different entities for trading allowances, parents, in-laws, the wife etc. sounds like blatant tax evasion (the illegal one) rather than tax avoidance. 

Lets be honest here, your parents, in-laws, the wife etc. are they going to do the sales listings, the shipping and record keeping? 

Yes we could set up a Ltd company and this is easy. But we don't want to set up a Ltd company. That comes with significant privacy issues and a hell of a lot more administrative burden. 

I would just like to re-iterate the point here that if you are selling something (even CGT exempt coinage) AS A TRADE as determined by HMRC then you will need to a) register for self assessment if you are a sole trader and/or b) if you hit £85,000 turnover register for VAT. 

The setting up of multiple entities and using of other peoples allowances or even getting your partner to "act" as a sole trader is just asking for trouble. We could very easily have set up "Mrs BYB" as a sole trader selling hand poured silver my business "sold" her. But lets be honest here, HMRC would simply look at this as evasion and rightly so. 

There is a fine line between avoidance (legal) and evasion (Illegal) and there are a lot of suggestions coming on this and the other thread I started that fall very much into the evasion category. 

Share this post


Link to post
Share on other sites

This all sounds a bit to much here BYB. 

If you buy items for the long term as part of your collection then you are not trading those items.  Keep receipts if you want, it would make sense that a gold silver coin dealer would have a collection of coins anyway , it just makes sense the same way a lot of garage owners have vintage or sport car collections.  

This £1000 allowance is for trading and not for dispersing or part dispersing or altering of a collection.  If someone buys 10-100 2019 sovereigns then sells them in 6 months at a £10 profit or loss it is trading.  If someone buys 2 2019 sovereigns in 6 months keeps the best one sells the other, not bothered that he lost £30 or gains £10 as his motive was his collection.  Plus another opportunity to buy let say a Vic sovereign has appeared which the collector has been searching for a long time has come up.

HMRC also make it clear that a seller who sells via buy it now is a trader.  BYB  you are a trader you are allowed to have a collection of coins, why are you so worried if you are that worried you should go to an accountant if you cannot afford one the CAB will give you 45min for free though thats usually for people who are in debt.  In your position i would pay for 1 hour advise with a specialist.  

             

Share this post


Link to post
Share on other sites
9 minutes ago, Pipers said:

This all sounds a bit to much here BYB. 

If you buy items for the long term as part of your collection then you are not trading those items.  Keep receipts if you want, it would make sense that a gold silver coin dealer would have a collection of coins anyway , it just makes sense the same way a lot of garage owners have vintage or sport car collections.  

This £1000 allowance is for trading and not for dispersing or part dispersing or altering of a collection.  If someone buys 10-100 2019 sovereigns then sells them in 6 months at a £10 profit or loss it is trading.  If someone buys 2 2019 sovereigns in 6 months keeps the best one sells the other, not bothered that he lost £30 or gains £10 as his motive was his collection.  Plus another opportunity to buy let say a Vic sovereign has appeared which the collector has been searching for a long time has come up.

HMRC also make it clear that a seller who sells via buy it now is a trader.  BYB  you are a trader you are allowed to have a collection of coins, why are you so worried if you are that worried you should go to an accountant if you cannot afford one the CAB will give you 45min for free though thats usually for people who are in debt.  In your position i would pay for 1 hour advise with a specialist.  

             

Thanks for the comment @Pipers

The purpose of this thread was in essence to raise awareness for people who might just think they are selling coins that are CGT exempt and therefore just a capital. 

I am quite familiar with all of the steps that need to be taken to make sure that my own individual collections and investments are kept separate so if and when the times comes to sell I have all the evidence I need to be able to defend myself if needed. 

The £1000 allowance is indeed for trading. But it is all about interpretation from the tax man. You may well have a collection and would be altering it, but if at the same time you have been selling coins on the side and HMRC cannot easily distinguish between them they may well end up challenging you. 

How many people here want to be taken to court over something like this? I know I don't - but in the eventuality that that happens we (Mrs BYB and I) have all our ducks in a row. But I still have a right to be worried because of the ridiculous system we live in, I can do all the right things, take all the right precautions and record keeping and still be challenged to defend myself by someone (and an agency) that has no idea about my own personal situation. That is what worries me so much. You could do everything right but end up in court regardless!

We have been talking with professionals already about this and I would highly recommend this to anyone out there who is thinking about this situation as it relates to themselves (the entire purpose of this thread!)

 

Share this post


Link to post
Share on other sites
6 hours ago, BackyardBullion said:

@sixgun Flipping over to different entities for trading allowances, parents, in-laws, the wife etc. sounds like blatant tax evasion (the illegal one) rather than tax avoidance.

Whose name is the account in? Who is receiving payment? - For ever people have used the tax allowances of children, relatives and spouses - no issues as i can see it. None whatsoever.

i have had several limited companies and i have never found there to be more administrative burden - i have found they create a world of extra schemes to reduce tax.

You are going to do what you feel comfortable with. i am not going to post here about tax evasion.

Is collecting a few coins and buying and selling them between other collectors a trade - this is what members do here - we know those who are running a business - that is dictated by the amount they sell here. i won't mention them but it is clear who is and then there are a number of borderline cases. i have a rough idea of the number of coins you have put up here and you appear a hobbyist. Your bars are however a business.

There is no proper definition of a trade as you know - so we have case law

1. profit-seeking motive; - are you just releasing funds to get other coins - i have too many for my needs and i want to release funds. i have not seen you selling large numbers of coins so not much of a trade is it? We could compare with others here who are selling £1000's a month in coins.
2. the number of transactions; - never counted the number of postings of coins you have made but never seemed to be a lot.
3. the nature of the asset; -  coins v bars you made yourself
4. existence of similar trading transactions or interests; coins v bars manufacture
5. changes to the asset; coins are unmodified - bars are being manufactured and customised
6. the way the sale was carried out; sold under BYB trademark and banner v sold as a private individual - should think about getting another account here -
7. the source of finance; - Ltd money and personal money - different entities - different money.
8. interval of time between purchase and sale; and - so hold onto items for 6 months and then sell
9. method of acquisition. - bar silver is bought and bars manufactured - coins are private sales - from dealers - blah blah.
 
Discussing this does not make something tax evasion - 
Edited by sixgun

Share this post


Link to post
Share on other sites
2 hours ago, Pipers said:

HMRC also make it clear that a seller who sells via buy it now is a trader.

             

Are you referring to eBay Buy It Now?  If so, do you have a link to a relevant HMRC page?  I’ve not heard of this before.

Share this post


Link to post
Share on other sites
19 minutes ago, sixgun said:

Whose name is the account in? Who is receiving payment? - For ever people have used the tax allowances of children, relatives and spouses - no issues as i can see it. None whatsoever.

i have had several limited companies and i have never found there to be more administrative burden - i have found they create a world of extra schemes to reduce tax.

You are going to do what you feel comfortable with. i am not going to post here about tax evasion.

Is collecting a few coins and buying and selling them between other collectors a trade - this is what members do here - we know those who are running a business - that is dictated by the amount they sell here. i won't mention them but it is clear who is and then there are a number of borderline cases. i have a rough idea of the number of coins you have put up here and you appear a hobbyist. Your bars are however a business.

There is no proper definition of a trade as you know - so we have case law

1. profit-seeking motive; - are you just releasing funds to get other coins - i have too many for my needs and i want to release funds. i have not seen you selling large numbers of coins so not much of a trade is it? We could compare with others here who are selling £1000's a month in coins.
2. the number of transactions; - never counted the number of postings of coins you have made but never seemed to be a lot.
3. the nature of the asset; -  coins v bars you made yourself
4. existence of similar trading transactions or interests; coins v bars manufacture
5. changes to the asset; coins are unmodified - bars are being manufactured and customised
6. the way the sale was carried out; sold under BYB trademark and banner v sold as a private individual - should think about getting another account here -
7. the source of finance; - Ltd money and personal money - different entities - different money.
8. interval of time between purchase and sale; and - so hold onto items for 6 months and then sell
9. method of acquisition. - bar silver is bought and bars manufactured - coins are private sales - from dealers - blah blah.
 
Discussing this does not make something tax evasion - 

Thanks for the follow up

I agree, talking about these things does not make them evasion.

But there would be a pretty strong case for it if someone used 10 different family members £1000 trading allowance to sell coins blatantly as  trade. 

At the end of the day the powers that be are the ones that impose their judgement and ask you to defend yourself in court.

That is the true crime here!

Share this post


Link to post
Share on other sites
3 minutes ago, BackyardBullion said:

But there would be a pretty strong case for it if someone used 10 different family members £1000 trading allowance to sell coins blatantly as  trade. 

At the end of the day the powers that be are the ones that impose their judgement and ask you to defend yourself in court.

That is the true crime here!

But it isn't a trade - it is 10 separate individuals selling bits and pieces which none of them even declare - HMRC says don't bother us with this.

i am not sure what the total of your coin sales come to - if you carry on selling on your website and under the BYB account on the silver forum then it is your trade - no argument about that. My first limited company i set up years before i needed to - i think it might have cost me more than it was worth but as it unfolded and as i expected i saved a lot of money. 

i am not saying anymore now - if i were the tax man i would say the coins are part of your business - nothing has been done to separate these off. You clearly want to pay tax and charge VAT on the coins you sell and as the tax man i will help you every step of the way.

Share this post


Link to post
Share on other sites

Hard selling on Ebay is trading, if you alter your collection what ever it is or even sell part of it is not trading.  If HMRC went after hobbyist and collectors then a large part of the UK economy would stall.  Can you imagine it when all collectors get a bill in May for there hobby activities because they sold their old fishing gear to buy new equipment. Or a sewer sells her old over locker and sewing machine to buy new ones, its just stupid.  .  I can tell you now the next few years the UK economy would tank, also MPs would be contacted by very angry voters.  Plus can you imagine the waste, people would start to take their items down the tip because they couldn't be bothered with the form filling or they are frightened of the Taxman.  Also if you have been a keen artist, then given up on that hobby after a few years so you sell your equipment you are not trading

Just remember badges of honer keep receipts.  It is true some peoples hobby is making money in that case hard luck.     

Edited by Pipers

Share this post


Link to post
Share on other sites

BYB, you mention privacy and I can't argue with that.

Not sure if I understand what concerns you about a limited company and privacy. 

Your name will be known, but have the correspondence and registered office somewhere other than your home, maybe your accountants, for a nominal fee. Your home address is not on the public register that way.

You could have nominee directors and not even have your name against it. That'll cost more, but is an option.

It doesn't have to say Mr and Mrs BYB, BYB house, BYB street, town, postcode etc.

If that is your concern? 

Much respect for all you do and enjoying the YouTube channel! 

Share this post


Link to post
Share on other sites
6 minutes ago, TopHatsTales said:

BYB, you mention privacy and I can't argue with that.

Not sure if I understand what concerns you about a limited company and privacy. 

Your name will be known, but have the correspondence and registered office somewhere other than your home, maybe your accountants, for a nominal fee. Your home address is not on the public register that way.

You could have nominee directors and not even have your name against it. That'll cost more, but is an option.

It doesn't have to say Mr and Mrs BYB, BYB house, BYB street, town, postcode etc.

If that is your concern? 

Much respect for all you do and enjoying the YouTube channel! 

There is the public accounts each year too. I am old fashioned about my privacy.

That and the admin of a ltd company are arduous

Share this post


Link to post
Share on other sites

But they do not really give much away.

Check what type of accounts need filing based on your criteria and expected growth. Hope you'll be suprised just how little information is published.

Certainly wont be clear how much money you 'actually made'.

I understand your views, but wonder if you are dismissing it, without all the facts.

I look at company accounts on companies house, knowing what the situation is at that company. What's on paper is often magnitudes better or worse than reality.

Share this post


Link to post
Share on other sites
Just now, TopHatsTales said:

But they do not really give much away.

Check what type of accounts need filing based on your criteria and expected growth. Hope you'll be suprised just how little information is published.

Certainly wont be clear how much money you 'actually made'.

I understand your views, but wonder if you are dismissing it, without all the facts.

I look at company accounts on companies house, knowing what the situation is at that company. What's on paper is often magnitudes better or worse than reality.

I know all the facts quite well. I have a number of friends that run their own Ltd companies and whilst there are admitidly a lot of benefits there are also a lot of negatives that don't suit out situation. So at this time we would prefer to keep things as a sole trader arrangement - not ruling out a Ltd company one day, but for right now we are good. 

Thanks for the suggestions and info though!

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.