I'm looking to get my 1st trade insurance policy, had a cracking price quoted. One of the things they ask is for proof of a trading history if I need to make a claim. (which I won't unless something get's stolen)

I've been buying an selling cars for a few years, I tended to buy a car I liked that needed work, fix it, run it a while and sell it on for a profit, it was more about it being a hobby than for money. Would go through 6-7 cars a year (some i'd break for spares) although didn't put them all in my name, some on the missus name.

Now I was buying private and selling private. This means no paper trail. I was planning on keeping it like this. Was aiming for selling one a month, so no major operation.

Anyone know if i'm going to encounter any issues keeping it like this? (thinking warrenty and tax)

Do you need receipts for everything you own if you have a trade insurance policy?

 

depends on if you plan on advertising as trade?

you might encounter problems if you advertise as trade, as soon as you do that buyers have certain rights if something goes wrong.

Also, you might have to start declaring profit to the tax man if "trading". When you buy a car do you normally get the yellow slip filled in? or do you put them in your name?

if you want trade insurance to cover vehicle you intend on buying, try insuring yourself as a part time mobile mechanic or valeter, works out cheaper that way apparently

 

you will also need to prove youer a trader if you have a bump too so bear that in mind!

 

Currently clamping down on traders policies, my boss has just fell foul of this.

 

Don't plan on advertising as trade. I guess because I need add each car to my policy, they expect to see receipts for buying and selling them all? If I buy and sell privately and don't have any paper work to support them, will I run into problems.

 

i have been trading part time for a couple of years, not so much buying and selling more servicing.
insurance isn't that harsh, i've never been asked to prove one way or another, even after an accident. some have mentioned keeping hold of receipts for parts, but even then ebay doesn't give receipts as such as there is no vat anyhow.
i wouldn't worry about the past, concentrate on the future, if you make money on something then declare it anyhow, you may get away with it for a while, but eventually someone will get the hump and ask questions. how much you declare is up to your conscience.

 

How does declaring tax on a car you have sold work? If you sell it for £1000 and bought it for £700 £100 in parts so £200 profit who do you declare it to and how much do they take. Where can you purchase warranty insurance to put against a car selling? What is the cost per car?

 

I read somewhere that the tax is based on the price you paid and what you sold it for and doesn't take into consideration the cost of parts, not sure if that's rubbish or not?

Is there a limit to the amount of V5's in your name, wasn't planning on filling out the traders V5 section, just putting them in my name. I was going to put half in my name and half in the missus (who's also on the policy).

 

Trading Standards monitor used car ads and can/will take PT traders pretending to be private sellers to court. You can't hide your trading history to deny a customer the rights they are entitled to under consumer law, and the cost of meeting those obligations is something that a legitimate business just has to swallow.

Also, the taxman has a dim view of people trading in any field but not registered for them to get their cut.

If you were to try and deny being a trader but reliant on a Traders policy, I'd guess they could use that info against you.

 

You'll probably be fine, but you are potentially opening yourself up for a massive world of pain.

If you ever have an accident and end up with some 50K third party payout being taken against your insurance company they will sue you to recover the money from you if you are in breach of contract.
To prove you are a trader in their eyes, you'll need tax returns showing you were, and if you claim you were trading without paying tax, then instead of just an insurance company on your back its then the taxman, and then thats straight off to prison.

You are 99% likely to get away it as you'll probably not have a claim etc, but if you do you really could be tieing yourself up in some massively awkward legal issues.

 

Thats rubbish, tax is on profit

 

Specifically section 14 of the 1979 sale of goods act, thats the massive difference when selling a car if you are a trader or not, sec 14 applies to traders but not to private individuals.
Also if a trader tries to sell a car "sold as seen" its actually illegal.


Indeed, the potential problems from telling the insurers you are trading and the taxman you are not, are big in one direction and massive in the other!

 

How do you go about telling the taxman your trading? Do you need to be a registered business?

I'm not sure it's worth all the hassle. Especially if I need to offer a warranty. I've never tucked anyone up on a car so it shouldn't be an issue but if some idiot buy's something Turbo'd off me, up's the boost and kills the engine, would I be liable? I sold an M3 to a joker once that told me he was going to do 150mph in it on his way home. 10 minutes later he mentions if the engine lets go on the way back, he's going to bring it back to me, nob.

It's as much as a hobby as anything. In the past i've only been buying cars I actually want to own, buying them needing work, fixing them, run them for a bit and sell them on for a profit (although depending on how long I decide to run them, don't always make a profit).

I'm not so worried about any technicality's with regards to the insurance, it's the government i'm more bothered about.

 

You just add it to a self assessment form.

The insurance is an expense you can write off against any profit you make too.



All down to trading standards, if a car blows up straight away you are liable as a private seller anyway pretty much, but as a trader there is far more implied by way of warranty, even quite minor faults can come back to haunt you.

 

You need to do some serious homework on this as you will get yourself into big trubble

If you have a traders policy you ( in the eyes of the tax man ) openly admitting you trade , why else would you have a TRADE policy

People will come on here and say ,im not a trader and have a trade policy , but the tax man ( if he suspects you ) will use this against you

If a private man sells a car and it blows up on the way home he DOES have rights to get his money back , its a myth that private sale to private sale is risk free

If you buy and sell but try and keep out of the eyes of the tax man then your stupid , they WILL catch you , it may be a month it may be 2 years but they will get you

If you are a part time trader and sell a car that blows up on the way home and you refuse to sort it the buyer will grass you to the tax man anyway , lol

Also Chip
A legit trader can sell a car without warranty, its what you put on the reciept that matters

You are far better of contacting a good accountant and doing it legit , The accountant will keep your tax bill down anyway ( if there any good ) and then you can sleep at night

 

Isn't that VAT? Don't you pay VAT on the difference between the buying price and selling price and just submit expences against it on your VAT return. Think thats right??

 

I think you would probably be surprised by what the law actually is then mate if you believe that.

Taken from here:

http://www.direct.gov.uk/en/Governme...ghts/DG_183047



I think about the only way not to warranty a sale legally is only if you are selling it as spares and repairs rather than actually selling it as a car.

 

Or selling to another trader - they are considered to be experts and don't need the same protection as offered to consumers.

I bought a wee car off one of my dealers for my sister when she passed her test. They had taken it in as a part-ex, but it was a rebuilt write-off so they couldn't/wouldn't retail it but, because I worked with them in the industry they sold it to me on an invoice marked TRADE SALE in big letters top and bottom. They couldn't do that if I was a walk-in customer and it is probably arguable that they shouldn't have done it for me either. The car ran perfectly for years, by the way.

 

Of course, the 1979 sale of goods act applies to consumers, but just writing "trade sale" on the invoice doesnt make it one, which a lot of traders dont seem to realise.



Lots of dodgy bedroom trader types DO try and use things like that, but it doesnt hold any water at all in law, if they are selling to a member of the public not a trader then they can write trade sales as many times as they want but it still doesnt become one.

 

I do bit of buying and selling on the side but it's usually only when a bargain comes up, so maybe one every few months if that.

All I do is, register the car in my name and leave it on the drive while doing any work needing doing. If I get someone ringing up to view it, I'll stick a weekends insurance on it for £35 so they can test drive it etc

I keep a record of all costs/profit involved but all sales are cash based and since the car is registered in my name it's technically a private sale

I will go into trading on a more permanent basis, at which point I'll do everything properly but for now I don't see the need

 

Thought all cars had to be insured, unless Sorn? And if sorn, how do you get around driving it?

 

I'm not sure that is technically a private sale just because you've registered it in your name!

 

It's not really, hence the reason if someone comes back with a fault I'll have it fixed!

 

Wasn't aware of that like? The car is off the road, on my land so I thought that would be fine.....most of the time the car would be sorned until the work was completed any way

 

The law changed last year, now if a car isnt SORN it requires insurance wether it is kept on road or off road.

 

As i said , depends on what you put on the reciept

 

'SOLD FOR SPARES OR REPAIRS' IS (sorry) the only exception I believe.

Martin is right. Car sales use the margin scheme for vat. Which means you pay vat on the sale price less purchase price less vatable costs incurred, (parts and labour if vat registered).

Tax is payable on profit as chip says.

You won't be affected by the vat though as I assume you are not vat registered.

 

A very useful firm I use is lawgistics. They have extremely valuable information for the motor trade, and provide warranty packages

 

at the moment theres an advert on our local radio station from the inland revenue asking tradesmen to tell them about any un -declared income as there watching for it now, so if your going to trade do it properly and legit as they will catch up with u they will screw u.

 

True but surely only a muppet is going to buy a working car that says 'spares or repair only' on the reciept? Anyone normal would instantly get alarm bells ringing.

 

Why Craig ?

If you are offered a classic car thats say 20+ years old that the seller will not put a warranty on , and you have viewed and test drove and your happy with it , then would you realy walk away just because saying sold as spares or repairs is the only way the trader can sell it without a warranty

You have to remember that most traders give 3/6/12 months warranties through warranty companies that they pay for , but most old cars cant get cover ( cossies being one ) so knowing most cossies get thrashed to death what traders will give a ( personal warranty ) on a 20 year old cossie

Most traders with a good reputation will sell such cars no problem as most buyers understand and will still buy knowing this , as long as there happy with the car after seeing and driving it

 

^ or on a car of any age if these terms are acknowlegded and agreed at the outset there is no problem. Particularly applies if the car is cheap, both parties appreciate it is, both parties are happy with the car and how it drives etc. and agree that a failure would be unfortunate but not the sellers fault so its their decision. They can walk away or take the deal and 9/10 buy a cheap car without major fault. Not a muppet thing to do imo when you think about it.

 

Paul, the old stuff you are dealing with is different obviously so you can put spares or repairs and people not bat an eyelid as they will know why, but try doing that on a 2007 ford ka etc and I reckon the punter might not be so understanding, so for most people selling cars they DO have to warranty it.

I bet a lot of small traders selling a cossie dont realise it does still come with an implied warranty if they dont specifically sell it as repairs only though!

 

Paul my point was mainly aimed at newer stuff. Obviously there are going to be exceptions.

 

For anyone thinking about concealing their status as a trader, this came in on the Automotive Management email today:

Car salesman could face jail for consumer offences

10/04/2012

A former used car salesman is facing jail after admitting flouting consumer protection laws.
Nazir Jafari tricked car buyers by placing adverts in Auto Trader under different mobile phone numbers and claiming he was selling them privately.
In reality, he was a trader who owned used car firm Nazir Motors.
At Birmingham Magistrates’ Court, he admitted 12 charges of falsely claiming to be a private seller, contrary to consumer protection regulations.
Magistrates adjourned the case for a pre-sentence report and warned Jafari he could face a prison sentence.
He will be sentenced at Birmingham Crown Court on May 8, reports the Birmingham Mail.
http://www.birminghammail.net/news/t...7319-30721156/

 

confirms exactly what i said earlier

they WILL catch you , the tax man is now losing millions due to the internet providing a showroom window for anyone and everyone to be a trader but think they can do it on the side

Its far easier to go legit ( even if its just a weekend thing ) and pay the taxman rather than get caught

They are finaly starting to grasp the fact that all the dole scroungers trading in everything from cars to clothes on the net are pushing the legit businesses under and that they are losing billions from the legit tarders and its hurting them regards there cut

 

So how much can you earn ''on the side'' before you pay tax on it?

 

There is no tax-free amount except your own personal allowance of about £7pa. If you already have a job your personal allowance is almost certainly fully utilised there, so any profit from trading is taxable.

 

I had to make a claim on my trade policy had to show bank details in company name, adverts from cars i advertised and they payed out trade value which if your own pride and joy that you spent a few quid on is a disapointment, as NY spares says its o.k unless you need to claim and then you wish you had done it right.

 

Reason I ask is, I've been renting a house out now for the past 14 months. I've only made £1100 out of it in this time (all of which goes into a separate account) but we've spent all of that and more on the house in that time. I.E new damp course and, a leak in the bathroom and a repair to the boiler.

I've been told that as I've used all profit to maintain the property (kept all reciepts as well), I won't have to pay tax on it.

The mortgage is on a buy to let and I have all the proper land lords insurances etc but I don't want to get caught short, especially since I have been selling a car or 2 on the side. Again not making huge profits, just more of a hobby in that area.