Registering as self-employed for the first time

Registering as self-employed for the first time with no previous employment history

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Reasonably well-off family have a 30-year old Son who lives in a family-owned property, with all bills paid and a small living allowance each month. No unemployent benefit claimed. Son has been indulging his love for semi-classic cars; buying, restoring, driving, selling to buy another. While there may have been a profit made from some sales, it wasn't intended to be a business and yearly profit way below the income tax threshold.

To facilitate this hobby, the Son has a trade insurance policy and a small rented unit.

Son and family are concerned that this hobby appears as sole trader/self-employment and plan to register as such in the new tax year.

However, there is also a concern as to what HMRC will say when they recieve the 'I am a sole trader notice'. Will they ask 'what has this person who has previously been tax invisible been doing for last several years?'. 

Replies (9)

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By 356B
23rd Mar 2020 11:29

If he's been off the radar, they'll want some history, probably including accounts for the years he's had a "hobby". If you can prove you've supported him or his other income has been adequate, it shouldn't be a problem.

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By Not Anonymous
23rd Mar 2020 11:43

What about the National Insurance thresholds, which are much lower than the tax threshold?

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Replying to Not Anonymous:
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By John DeLorean
23rd Mar 2020 11:51

Much less than £8.6k - this really wasn't about an existing sole trader deciding to become 'legit', just to formalise the arrangement and avoid some HMRC guesstimate of income.

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Replying to John DeLorean:
By SteveHa
23rd Mar 2020 13:38

If that's the case then there is no failure under the taxes acts, and so nothing to worry about other than being able to explain how he's been living if asked.

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By CJaneH
23rd Mar 2020 12:41

It sounds like if it is accepted as a business it will be a 'hobby business'. With paying rent and traders insurance will there be any profit?

Do hobby businesses qualify you to pay class 2 NI?

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Replying to CJaneH:
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By John DeLorean
23rd Mar 2020 16:41

Trade car insurance is surprisingly cheap at £1k, but allows for several cars to be insured at any time. Unit rental also not so expensive at £150 per month. That said, I'd guess that even with those expenses, income could grow to more than the £1k hobby business threshold.

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By Roland195
23rd Mar 2020 17:01

And his sudden desire to report on 23/03/2020 has nothing at all to do with eligibility for a business grant?

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Replying to Roland195:
the sea otter
By memyself-eye
23rd Mar 2020 18:48

Possibly - I bet we see a few of these, my window cleaner included.
Great way for HMRC to catch folks in the black economy (and about time too!)

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Replying to Roland195:
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By John DeLorean
24th Mar 2020 12:12

I can honestly say it isn't. But if that could be inferred then maybe he should wait until this crisis is over so as not to be confused with those with that intent.

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