how many cars can you sell before your a dealer?

how many cars can you sell before your a dealer?

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Discussion

moanthebairns

Original Poster:

17,918 posts

197 months

Thursday 8th December 2011
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does anyone know how many cars in a year you can sell before your classed as a dealer?

Id just like to know due to boredum.

Thanks

98elise

26,376 posts

160 months

Thursday 8th December 2011
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1

A dealer is someone who buys and sells cars for profit, if you do this then you are a car dealer regardless of the number.

Car dealing is no different to any other form of retail (other than its normal to sell SH stock)

Edited by 98elise on Thursday 8th December 08:16

Eric Mc

121,779 posts

264 months

Thursday 8th December 2011
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HMRC does not stipulate numbers when asessing whether somebody is actually running a business. Their rules state that anyone who "carries out a transaction or a series of transactions with a view to making a profit" is defined as carrying on a trade.

In reality, most people who only own one car at a time and change that car frequently, will generally not be looked on as a car trader.

However, if you are going about buying batches of cars, holding them in stock, advertising the car sales regularly etc, then it could be held that you are indeed in business.

The problem is that it is up to the individual to notify HMRC that they have commenced trading and there are fines and penalties for failure to notify. There are also fines, penalties and ultimately prison sentences for those who fail to complete self assessment tax returns when they should and notifying HMRC of the profits thay are making and paying the Income Tax and Class 4 National Insurance arising on those profits.

Meoricin

2,880 posts

168 months

Thursday 8th December 2011
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Wasn't there some organisation (insurance cos, DVLA, trading standards?), who said they considered someone to be a 'trader' for their purposes if they sold 6 cars within a year?

Bonefish Blues

26,448 posts

222 months

Thursday 8th December 2011
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Meoricin said:
Wasn't there some organisation (insurance cos, DVLA, trading standards?), who said they considered someone to be a 'trader' for their purposes if they sold 6 cars within a year?
A Trader recently quoted this threshhold to me, too.

Ozzie Osmond

21,189 posts

245 months

Thursday 8th December 2011
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Meoricin said:
Wasn't there some organisation (insurance cos, DVLA, trading standards?), who said they considered someone to be a 'trader' for their purposes if they sold 6 cars within a year?
They can say what they like, the facts are as set out in Eric's post above, at least as regards tax.

If you are wondering whether someone is a "private seller" or a "trade seller" for warranty purposes I expect the court would take a similar approach.

Anyone who has several cars for sale at once is likely to be seen as a trader. The grey area comes where someone churns through lots of private cars one at a time which they keep and use for a few weeks before selling on.

davepoth

29,395 posts

198 months

Thursday 8th December 2011
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No threshold per se, as was said above it's all about whether you are intending to be a dealer. It's a similar situation with selling on eBay; the definition is "are you intending to sell for profit?" and if the answer is yes then it's a business.

You are free to buy and sell as many cars as you like provided you can show HMRC you aren't intending to sell for profit.

warp9

1,583 posts

196 months

Thursday 8th December 2011
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Insurers that provide motor trade insurance would look to you turning over a minimum of 6 vehicles a year for them to class you as a trader. You would also have to be able to show proof of trading i.e. receipts, accounts, adverts etc in the event of a claim.

Meoricin

2,880 posts

168 months

Thursday 8th December 2011
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warp9 said:
Insurers that provide motor trade insurance would look to you turning over a minimum of 6 vehicles a year for them to class you as a trader. You would also have to be able to show proof of trading i.e. receipts, accounts, adverts etc in the event of a claim.
That's the one I was thinking of. Obviously it only pertains to the insurance, and not tax/other duties etc. Those would be looked at on a case-by-case basis.

kambites

67,461 posts

220 months

Thursday 8th December 2011
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Surely there must be some criteria beyond which you cannot sell a car "as seen"?

BoRED S2upid

19,643 posts

239 months

Thursday 8th December 2011
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warp9 said:
Insurers that provide motor trade insurance would look to you turning over a minimum of 6 vehicles a year for them to class you as a trader. You would also have to be able to show proof of trading i.e. receipts, accounts, adverts etc in the event of a claim.
A mate of mine has a traders policy and has to turn over a minimum of 10 cars a year. He doesn't have to show proof of trading just 10 cars owned in his name registered to him going on and off the policy within 12 months.

TROOPER88

1,767 posts

178 months

Thursday 8th December 2011
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warp9 said:
Insurers that provide motor trade insurance would look to you turning over a minimum of 6 vehicles a year for them to class you as a trader. You would also have to be able to show proof of trading i.e. receipts, accounts, adverts etc in the event of a claim.
Load of rubbish.

I recently cancelled my traders policy and whilst on the phone enquired about numbers.
There is no 'set' number (well there wasn't with the compnay I was with).

As has been said on this thread and 100's similar if you buy a vehicle and attempt to sell said vehicle on for profit that transaction is seen as a 'business' transaction.

If you sell a car for 'business' (trading) purpsoes SOGA applies.

TROOPER88

1,767 posts

178 months

Thursday 8th December 2011
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BoRED S2upid said:
A mate of mine has a traders policy and has to turn over a minimum of 10 cars a year. He doesn't have to show proof of trading just 10 cars owned in his name registered to him going on and off the policy within 12 months.
Again total load of tosh.

The whole idea of the traders policy is so that the vehicle/s DO NOT HAVE TO BE REGISTERED IN HIS NAME to be insured to drive them (as outlined in the policy docs).

aw51 121565

4,771 posts

232 months

Saturday 10th December 2011
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The local authority will have an interest - running a business "selling cars from a home address etc" - and they can enforce planning regs to restrict selling numerous cars from a home address, as opposed to selling the same number of cars from a business address...

They also search Auto Trader etc for "frequent flyers"; I guess this includes the Bay of E nowadays.

They will have a numerical limit on the numbers of cars that members of the public can sell from home. It could be 6, it could be 12, it could be... It varies from area to area.

But one can't expect to sell cars fom home as a business - if that is "the plan" - without planning permission for ever. They'll probably come calling sooner or later, even if only because the neighbour curtain-twitchers shop you frown .

If they DO come calling, make sure you've got evidence (screenprints, copies of the mags your ads were in and so on) of ALL your sales and that there aren't any other car sales etc in Auto Trader or on eBay with your mobile number or username in Auto Trader or on eBay that will mess it up wink ...

warp9

1,583 posts

196 months

Monday 19th December 2011
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TROOPER88 said:
warp9 said:
Insurers that provide motor trade insurance would look to you turning over a minimum of 6 vehicles a year for them to class you as a trader. You would also have to be able to show proof of trading i.e. receipts, accounts, adverts etc in the event of a claim.
Load of rubbish.

I recently cancelled my traders policy and whilst on the phone enquired about numbers.
There is no 'set' number (well there wasn't with the compnay I was with).
Really? So some bloke you spoke at your brokers said there wasn't a set number. OK then.

But I can guarantee that if you claim and you can't prove you're a bonifide trader, then there is more than a good chance your claim is going to get thrown out.

See it happen all the time. There are just too many people out there think they can buck the system and put all their family members on a traders policy, change the car a couple of times a year, disco. It don't work though.

When push comes to shove, you will have to prove you are a trader and that means properly showing you buy and sell cars - at least 6 per annum with the insurers we deal with.

RZ1

4,316 posts

205 months

Monday 19th December 2011
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Interesting topic, i tend to get bored of cars quickly so will tend to sell cars after a few months of ownership. Normally i tend to get through 5 or 6 cars a year, does that mean i am a trader. No as all my cars are always registered to me and 9 times out of 10 they will be sold for less then i paid, however i don't buy them with a view to sell, i buy them as i want to spend a few months driving them.
Disadvantage is insurance is bloody expensive as i normally have to pay £25 admin each time i change the car.

Ozzie Osmond

21,189 posts

245 months

Monday 19th December 2011
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RZ1 said:
Interesting topic, i tend to get bored of cars quickly so will tend to sell cars after a few months of ownership. Normally i tend to get through 5 or 6 cars a year, does that mean i am a trader. No as all my cars are always registered to me and 9 times out of 10 they will be sold for less then i paid, however i don't buy them with a view to sell, i buy them as i want to spend a few months driving them.
  • Multiple consecutive private car ownership does not amount to trading (at least in the absence of a clear intention to make a profit).
  • Just because a someone makes a loss on his cars doesn't mean he's not a trader. However, the tax man is unlikely to be interested if no money is being made. Sale of Goods Act will still apply in full as regards implied warranty of fitness for purpose.

GR8GUY

14 posts

139 months

Tuesday 14th May 2013
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Its been a while since last post on this thread. Does anyone have an updated answer on this question ? How many cars can you sell before being classed as a dealer and answerable to the tax man ?

minghis

1,569 posts

250 months

Tuesday 14th May 2013
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The first 2 replies under the OP answer the question, right then and right now.

V8RX7

26,765 posts

262 months

Tuesday 14th May 2013
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warp9 said:
Insurers that provide motor trade insurance would look to you turning over a minimum of 6 vehicles a year for them to class you as a trader.

You would also have to be able to show proof of trading i.e. receipts, accounts, adverts etc in the event of a claim.
I had a £1,200 claim on Trade Insurance there was no such request.