The Taxman

[alldigging]

2014 was stated as an exceptional year for honey harvest - so having an excess in a good year doesn't mean you will ordinarily. Does that affect things too?

 

[Hivemaker.]

Does that affect things too?

Definitely does, you get less money, so less tax to pay.

 

[psafloyd]

No ... it's not as simple as that ... read the threads on the search button. You only pay tax on PROFIT not SALES. If you are a hobby beekeeper/honey seller then it's highly unlikely you will have made a profit when you take into account the CONSUMABLES associated with your beekeeping. IE: Sugar, treatments, foundation, jars, labels, travelling expenses, electricity, PPE etc.etc. The only things you can't claim to offset against your sales, as a hobby beekeeper, are capital equipment items - hives, extractors etc.

So, unless you have a huge honey surplus and have not kept a record of what you have spent making that huge surplus I very much doubt there is anything of any note to declare.

You need to have a basic understanding of how our tax laws work and an hour or two reading the previous threads will give you that necessary understanding.

If my words appear a little harsh ... just consider them tough love ...

My accountant said the same thing last year.

He knew I am a beekeeper and that I sold honey. As he was doing my tax returns, he asked me about my income from this.

I told him it was about a £800 but did he want my receipts and invoices for my costs as well –-which came to considerably more.

Once he discovered I wasn't in profit, he said no, just let me know if that changes.

Of course, I could prove all my expenditure.

 

[Arfermo]

Anybody considered going NODOM to hide their profits in a nice bank somewhere?

 

[B+.]

My accountant said the same thing last year. .

You do all know that there are different types of accountant don't you? I see comments posted here that I wouldn't expect to hear from an accountant

 

[Hivemaker.]

You do all know that there are different types of accountant don't you?

Come across quite a few that are turf accountants, when i was a kid i used to think they had something to do with the turf we burn on the fire.

 

[Gilberdyke John]

You do all know that there are different types of accountant don't you? I see comments posted here that I wouldn't expect to hear from an accountant

On 27th Feb you posted that you had limited accounting expertise. Perhaps other accountants may make comments that you are yet to experience?

 

[Arfermo]

On 27th Feb you posted that you had limited accounting expertise. Perhaps other accountants may make comments that you are yet to experience?

Ouch. Touche!

 

[B+.]

On 27th Feb you posted that you had limited accounting expertise. Perhaps other accountants may make comments that you are yet to experience?

Yes. Except that some of the comments I hear reported here conflict with areas I am qualified in and can cite sources. I can only assume that these comments are
a) remembered incorrectly
b) misunderstood

If you are qualified to correct anything I have said, please do so.

 

[Arfermo]

Still reckon going nondom must be the answer?

 

[Erichalfbee]

Just a thought for all you do it as a hobby but if you added up all your costs and found you were making a loss, then doesn't it make sense to register with HMRC as a business then you can off set these losses against any other income you have any pay less tax overall ?

But as has been pointed out ad nauseam in other threads on this matter, HMRC are not interested in funding a hobby and will take a submission in this vein as just that.

 

[pargyle]

But as has been pointed out ad nauseam in other threads on this matter, HMRC are not interested in funding a hobby and will take a submission in this vein as just that.

+1 ... And the inspectors crawl over every single expense item you submit in the hope that they find a mars bar on your fuel receipt .... and strike it off. I've been there - not a pleasant experience.

The tax laws place the onus on you to prove HMRC wrong not the other way round ... they will start by claiming you owe them a large amount and then you have to disprove it or at least whittle it down - fine if you have everything buttoned up but if there are any holes in your accounting you are in trouble. My accountants were the only ones who won in the end ... their bill was bigger than the settlement with HMRC. It still rankles many years on as my claim for a refund was legitimate - the revenue just didn't like giving me tax back on my full time job against losses I made whilst building up a small sideline business.

 

[Erichalfbee]

I had a tax investigation three months after my accountant told me not to bother renewing my insurance for said interference, citing the fact that he had never had a client scrutinised. I was mortified!
It took six months and they found I had underpaid by £3.75.
My accountant had to do the work for nothing but he took HMRC to the wire, submitting stuff ten seconds before it was due, over and over again. I don't know whether he was winding me or the Taxman up.

 

[Hivemaker.]

But as has been pointed out ad nauseam in other threads on this matter, HMRC are not interested in funding a hobby and will take a submission in this vein as just that.

So.... you mean you can't be in full time employment, paying tax, at say a car factory, but buy yourself a yacht for your hobby, then register that you have a part time fishing business, and claim all losses/costs against tax paid in your full time employment at the car factory, wonder why not.

 

[jenkinsbrynmair]

So.... you mean you can't be in full time employment, paying tax, at say a car factory, but buy yourself a yacht for your hobby, then register that you have a part time fishing business, and claim all losses/costs against tax paid in your full time employment at the car factory, wonder why not.

Taxmen may have no soul and definitely no spine - but they're not stupid

 

[Dishmop]

Please could someone help me i want to sell honey i have left over and next year hope to get more how much do i need to declare to the HMRC ?

Ask HMRC

 

[midnight sun]

Ask HMRC

Best answer yet!

 

[jenkinsbrynmair]

Still reckon going nondom must be the answer?

Is that the polite way of describing sex without prophylactics?

 

[Jack Straw]

Tax and honey sales

When honey or other bee products are sold HMRC and the seller each need to decide whether the sale involves a trade for tax purposes.

If the income is from a trade then any profits will be assessable and any losses will be relievable. Depending upon the seller’s other income this could give rise to a tax liability or a tax refund.

If the income is not from a trade but from a hobby then any income is not assessable and tax relief is not available against any expenses incurred

The Taxes Acts do not provide any definition of the meaning of ‘trade’ and so instead both HMRC and the seller must instead rely upon definitions set by the Courts; these have come to be known as ‘the badges of trade’. There are four badges which are relevant here. Although in some circumstance the existence of a single badge is enough to show trading as a general rule the badges should not be taken in isolation but considered together.

Intention to make a profit
Looking at the source of the income as a whole and taking into account all income generated and all expenses incurred; was there an intention to create a profit. It should not matter whether a profit is made or not but if one has been then this is a strong indicator of trading.

As a rule of thumb to calculate the profit you should take the value of that year’s sales and deduct that year’s costs – jars and labels, bee feedstuffs and health treatments, admin, travelling etc and also deduct 25% of the cost of any equipment bought over the last 4 years

If you had sold the total amount of product you had available for sale at your sale price would you have made a profit? If so then there was probably an intention to make a profit

Modification of the asset to make it more saleable
If nothing is done to an asset then it is less likely to be trading; for instance if a surplus of brood boxes/ supers are bought and sold straight on. If however the asset is manipulated, altered or improved then it is more likely to be trading; for instance a small nucleus of bees purchased in the Autumn, fed and nurtured and sold as a large over-wintered colony in the Spring.

Frequency and number of transactions
Selling half a dozen jars of honey at the gate is unlikely to be treated as a trade however selling a larger quantity through shops, farmers markets or other commercial outlets is a stronger indicator of trading.

Having a business organisation
If you have a distinctive business name, design a logo or have a website then you are more likely to be trading than if you are operating under your own name

So the answer to the original question – ‘I want to sell some honey I have left over…how much do I need to declare to HMRC’ is simple - consider the badges of trade. If you decide that the badges indicate that you were trading then you will need to declare all of your sales and associated expenses to HMRC. If you decide that the sales formed a small part of your hobby then you do not need to declare them to HMRC.


In response to some of the points made earlier in this thread
Trading at a farmer’s market is an indication of trading but is not definitive

10 jars of surplus honey sold to a shop does not automatically constitute a trade

'Selling to family and friends is a hobby' If receipts are unsolicited and unexpected they are not taxable. So giving a jar and then being offered a fiver is okay. Holding onto the jar until the fiver is passed over is not

There is no 30 hive limit. A local Tax Inspector may have quoted that figure but it has no basis in tax law. It would be relatively easy to be trading with many fewer hives, equally it would be possible to have many more and still not be trading

The tax laws do not place the onus on HMRC to prove you wrong. The same badges of trade are there for both parties to use to determine whether a sale constitutes trading or not. In cases where a mutual decision cannot be reached there is the opportunity for either party to take the matter to a Tax Tribunal.

It is of course important to keep records of everything just in case. If you are close to making a profit, or if you are making frequent sales through commercial outlets then I would recommend keeping details of your income and expenditure for 7 years

There are no dispensations for farm gate sales, but by their nature farm gate sales are unlikely to fall foul of any of the badges of trade and for this reason are unlikely to form part of trading

It is not correct that if you work and pay tax any other income needs to be declared, it is only trading income as defined by considering the badges of trade which needs to be declared

BIM290090 forms part of the HMRC Business Inspector’s Manual. This section should be read in context with the rest of the Business Inspectors Manual.

VBNB27000 forms part of the VAT manual. VAT registration is not necessary until sales exceed £81,000 pa. I would not recommend voluntary registration until turnover exceeds say £10,000. I would be happy to comment on VAT on another thread

‘HMRC are clamping down and viewing Facebook, Twitter, Pinterest etc’ HMRC are always interested in the black economy. They are currently offering an amnesty to anyone trading via Ebay and other auction sites who has not yet declared their income. Once the amnesty is over I would expect HMRC to take positive action against anyone trading on these sites who does not complete a tax return.

My back ground is that I am a qualified accountant and tax advisor and a hobby beekeeper. Please feel free to PM me if you have any queries regarding the above

 

[Dishmop]

If you want the taxman to know how many jars of honey you sold last year and how much profit you made..spread it about on all the social media sites...

My two jars wont bother them too much....and I gave one of those to a forum member.