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Am I Trading or Not?
How to decide if you're trading or not? Generally, you are trading if you: sell goods you have bought for resale make items yourself and sell them, intending to make a profit sell (or buy) goods on behalf of others for financial gain (for example on commission) provide a service and receive payment (whether in cash or in kind) If you are trading you may have to pay Income Tax, National Insurance Contributions and VAT, and HM Revenue & Customs (HMRC) will treat you as self-employed in that trade.
But you are not trading if you:
sell occasional, unwanted personal items through internet auctions or classified advertisements attend a car boot sale once a year to sell unwanted household items Even if you don't need to pay Income Tax you should still check if you need to pay other taxes or duties.
Essentially, 'trade' is a two-way relationship between a trader and a customer, where the trader provides goods or services to the customer for reward on a commercial basis.
Prince Chidi
Decisions
To help decide whether a trade exists or not the courts have identified '9 indicators or badges'. It is not always easy to decide even using these 'badges', because a trade may exist even if only 1 or 2 of the indicators are present. Follow the link below to read some helpful trading examples.... http://www.hmrc.gov.uk/guidance/selli... http://www.hmrc.gov.uk/guidance/selli...
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