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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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.
What about the National Insurance thresholds, which are much lower than the tax threshold?
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.
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?
And his sudden desire to report on 23/03/2020 has nothing at all to do with eligibility for a business grant?
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!)