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Selling off old record collection

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Client has a record collection, amassed over several years. Sold a few hundred records of this collection on ebay for about £25k last year.  What is the tax treatment?

Having considered the badges of trade and the various options, income tax, capital gains, not trading. I am still left thinking I am not sure. The Revenue has no guidance that is of any relevance, they just point you to the badges of trade. I am not sure that much tax is involved because if we are trading then surely we must value the collection the date we started trading, so sales and cost will net off, for capital gains (which is the way I am thinking of going) then this would be a wasting asset and therefore nothing to pay. Views on this would be appreciated.

 

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Replying to DJKL:
RLI
By lionofludesch
23rd Jan 2020 11:28

DJKL wrote:

What about those wonderful Ercol collections.

You said it - a collection, not a set.

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Replying to lionofludesch:
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By C Graham
24th Jan 2020 13:58

I think not just something that can be 'completed' as that would be too ambiguous - ie, I have completed my collection of china and am now selling it. I want to complete my stamp collection with a purchase of penny blacks.

but it is something that in defined as BEING 'complete' or incomplete must therefore be a set. It has a pre-defined number of units.

a set or an asset!

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Replying to Wilson Philips:
Hallerud at Easter
By DJKL
24th Jan 2020 15:45

What about my wife's precious dinner set, we have a six piece set of all the plates,bowls, serving bowls, gravy boats etc, but if she could source another 4 place settings now (which she would want to do as if we cater for more than 6 two different dinner services need used) , thirty years after we got the original set as a wedding present, surely these additions then become part of our Noritake dinner set.

I have a fair quantity of Hornby Dublo (the old stuff) I keep adding to it (items I do not yet have), is this a set if it later goes to auction as one lot (albeit I likely am a bit short of £6k worth ?

Does how it is acquired and how it is sold have a bearing?

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Replying to DJKL:
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By whitevanman
24th Jan 2020 16:59

The HMRC view (as set out in their guidance at CG76632) would suggest the time etc of acquisition is not relevant. Rather they consider whether the items are essentially similar and complementary and (no doubt most importantly) worth more together than separately.

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Replying to whitevanman:
Hallerud at Easter
By DJKL
24th Jan 2020 17:32

So, a set can,in their view anyway, be built.

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Replying to DJKL:
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By C Graham
24th Jan 2020 17:36

at auction - probably more like 'a collection of... '

Once you can add pieces to a set, it then really becomes a collection of Noritake dinnerware - the original gift probably came boxed with a fixed number of place settings. Set, settings, dinner set, as long as it is 'complete' - ie not missing a cup or dish.

Presumably it only really matters when talking about the potential value it has as a 'complete' set. And generally when selling valuables you would sell a 'set' as it was originally packaged or designed as a whole.

Of course the set packaging can certainly enhance the value though obvs not feasible with furniture.

If a table was designed to fit 6 matching chairs, you'd not enhance the value by selling with 7 chairs.

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By C Graham
24th Jan 2020 10:47

Do you depreciate value by condition - ie the more vinyl is played, the more it deteriorates. Or does it go up in value - the rarer the album, the more it appreciates? And what if both apply?

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Replying to C Graham:
Hallerud at Easter
By DJKL
24th Jan 2020 13:01

There is a book sequel for Nick Hornby within that question, he only considered the appropriate shelf order (I do A-Z by band but each immediately follow by solo works by members e.g. Beatles then Harrison,Lennon McCartney solo works inc Wings- I have no solo Ringo output)

It takes the debate squarely into the wonderful realm of accountancy from the mundane question of storage.

I must say I do like the use depreciation approach, very akin to aircraft flight hours depreciation. Presume for a revaluation approach you need to adopt a particular accounting framework?

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By dmmarler
25th Jan 2020 14:42

I am just green with envy that your client managed such significant sales on eBay ... Any idea what he got all the £ for? I'll have a hunt around my record collection. As far as I am aware, selling on eBay is "trading" as far as HMRC is concerned unless you can prove otherwise. So if you are just selling old personal stuff to downsize, then the value the items realise is the cost of goods sold. Keeping proper records will always help - including those of items which have not sold and been taken to the local charity shop. Did he keep proper records? Did all the items go through PayPal or did he get cash? Does he have a record of the PayPal and eBay charges, and the postage, etc.? I must admit the sales seem very substantial for what is effectively a garage sale (even if it is Maserati garage). I would make sure you have everything well identified or queries as to where the money really came from could arise.

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Replying to dmmarler:
Hallerud at Easter
By DJKL
25th Jan 2020 17:03

Hope that is not the case re HMRC considering all sales on E Bay trading, but if they do they are imho wrong- I sold about £2,000 (net of costs) of model railway items , about 60-70 lots,after my father died, it was merely a better way of realising that part of his estate as for about half of it (The Triang TT he had collected) I had only been offered £400 as a joblot sale and I just could not bring myself to accept that low a figure.

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