HMRC tax and beekeeping

[Amari]

My pragmatic answer to anyone who asks me if I intend to declare any profit: 'I sell honey to cover the costs of my hobby'.

 

[madasafish]

My pragmatic answer to anyone who asks me if I intend to declare any profit: 'I sell honey to cover the costs of my hobby'.

My answer - as a retired accountant - would be: 'I sell honey to cover some of the costs of my hobby'.

 

[MuswellMetro]

if you treat it as a hobby, then you cannot offset your capital costs, either start up or on going replacements

 

[Dishmop]

My answer - as a retired accountant - would be: 'I sell honey to cover some of the costs of my hobby'.

As a liar I'd deny any knowledge of selling honey, and the Bentley was given to me as a gift..

 

[psafloyd]

What would be considered "significant income" ?
I've heard of some ebay sellers getting into tax problems when only making a couple of hundred quid profit.

I imagine it depends if they are trading, FF.

 

[psafloyd]

I thought this was discussed in thread on this forum in the not too distant past. But in any case, in order for the tax to be interested it has to be classed in their eyes as a business.
If you are a hobby beekeeper (like every single one of us on this forum...) then you are exempt at the moment.
To be a business you would have to be regularly selling produce or buying and selling produce or items. The honey crop at the end of the season that you may sell at the door would not count. If you had a stall a couple of times at the local farmer market say, then neither would that. If on the other hand you had a stall most of the time then that would be a business.
if you visit the government web site (gov.uk) there is a link to this info. and to be honest it gives you examples that are better than mine and easy to grasp.

Not sure exempt is the right word, Midnight Sun, but my accountant wanted to know about my trade over the past year.

However, as I spent more than I earned back (and I could document it), he didn't want to know any more.

 

[psafloyd]

this year is going to be awkward as most will have had a bumper crop that might take a long time to sell

Not really. It's not like duty on alcohol which is due as soon as the product is made.

You will only pay liable for tax on that which you sell and just because this is a bumper year doesn't mean you will have record sales.

 

[psafloyd]

I must admit I know very little about tax, letting the people I work for sort all that out for me. Looking at the hmrc gov website it seems like a lot of faff and I'd rather not have to submit a self assessment return. Just wondered what would happen in ten or twenty years time if the taxman suddenly wanted to know if I'd declared all the income from selling honey and bees in that time.

Keep a record of ALL expenses. And mileage too if applicable, as this can all be used to offset your tax.

If you start making regular (and even sizeable) profits, you'd best think again, but not before then.

 

[psafloyd]

How can they prove how much honey you have harvested each year??

Maybe they will interview the bees

The can't. Only know what you declare as sales.

 

[psafloyd]

if you treat it as a hobby, then you cannot offset your capital costs, either start up or on going replacements

If you generate an income from it, you can, MM. Or so says my accountant.

 

[jenkinsbrynmair]

Another way of looking at it is if your income in any single quarter approaches £25K (the VAT registration threshold)

Being liable to register for VAT and being a business are two entirely different things many businesses are not registered for VAT and I think I'd be pretty happy if my 'hobby' turned over £80K a year(which is the present threshold for annual turnover - or over £25K in any one quarter) do you honestly think the bloo.... er Revenue would leave you alone as long as you didn't exceed the threshold?

 

[midnight sun]

As a liar I'd deny any knowledge of selling honey, and the Bentley was given to me as a gift..

 

[pargyle]

The can't. Only know what you declare as sales.

You would be surprised at what the HMRC computers have in the way of financial models that tell them what you SHOULD be making ... persuading them that you HAVEN'T made that much is a long and expensive business. It can end up in the biggest cost being accountants fees as the HMRC can insist on an independent audit - which you have to pay for ... if they think there is a serious fraud ...

 

[Hivemaker.]

You would be surprised at what the HMRC computers have in the way of financial models that tell them what you SHOULD be making ... persuading them that you HAVEN'T made that much is a long and expensive business. It can end up in the biggest cost being accountants fees as the HMRC can insist on an independent audit - which you have to pay for ... if they think there is a serious fraud ...

And an in depth search, and it can go on for years.

 

[pargyle]

And an in depth search, and it can go on for years.

+1 ... It was a long time ago but I still bear the scars .... even more galling was the fact that they were looking for something that wasn't there !!

 

[jackstraw]

Commercial basis

Father Fox

In order to be registered for VAT or IT the beekeeping needs to be run on a commercial basis. There are technical tests for this but common sense is as good a measure as any. Would an independent individual looking at the business and its trading results consider the beekeeping to carried out with the intention of making a profit. It is not necessary to have made a profit but the intention to do so should certainly be there.

If the business should be registered for Income Tax then the owner(s) must submit a self-assessment tax return. The penalties for not doing so are no longer tax geared but based on the amount of time the return is late.

My background is that I am a qualified accountant and tax advisor, as well as being a hobby beekeeper. Please PM me if you would like any further advice

 

[pargyle]

Father Fox

In order to be registered for VAT or IT the beekeeping needs to be run on a commercial basis. There are technical tests for this but common sense is as good a measure as any. Would an independent individual looking at the business and its trading results consider the beekeeping to carried out with the intention of making a profit. It is not necessary to have made a profit but the intention to do so should certainly be there.

If the business should be registered for Income Tax then the owner(s) must submit a self-assessment tax return. The penalties for not doing so are no longer tax geared but based on the amount of time the return is late.

My background is that I am a qualified accountant and tax advisor, as well as being a hobby beekeeper. Please PM me if you would like any further advice

There were some excellent (very well received) posts from you back in January ....

http://www.beekeepingforum.co.uk/showthread.php?t=20645&page=11