Selling "goods" outside EU as a non business activity & HMRC

[sherbertdip]

I'm after some direction if possible as to what I need to do to send (sell) "goods" to non EU countries, primarily the USA.

Background: I made some Carbon Fibre cycling "parts", they are a niche product in a niche sub division of cycling interest and ownership.

On an international Facebook group I posted what I had done, I have now had people asking me to make these for them, mainly from EU countries but also quite a few from the USA.

As an individual "knocking" these up in my shed, (I don't own a company) what do I have to do to ensure that IF I did make some for these people they would actually get them through customs?

Also, I would charge for raw material, but if I add some "beer money" on will that be classed as income and I need to tell HMRC?

Cheers.

Dip

[cat with a hat]

sherbertdip said:

Also, I would charge for raw material, but if I add some "beer money" on will that be classed as income and I need to tell HMRC?

Dip

Yes.

If you're making a couple of parts a year for 'distant friends' you might not consider it as a business/income, but I expect this is a small business on the side.

[Olivera]

sherbertdip said:

Also, I would charge for raw material, but if I add some "beer money" on will that be classed as income and I need to tell HMRC?

Dip

The beer money has nothing to with it, charging anyone anything for the product will count as income.

[Escapegoat]

You are self-employed in this endeavour, and that means you need to keep proper records, and include the revenue and your relevant expenses in a self-assessment tax return. If you don't already have to fill one of those in, you need to contact HMRC and get them to send you the joyful paperwork.

Your non-EU customers (and who know what after Brexit) may have to pay their local Customs and postal/agency clearance fees, but you can't know what they will be until you get feedback from them. So just let them know that.

Good luck - hope it takes off.

[Nickyboy]

sherbertdip said:

As an individual "knocking" these up in my shed, (I don't own a company) what do I have to do to ensure that IF I did make some for these people they would actually get them through customs?

Makes no difference on whether you send them as a "gift" or commercial goods, the difference is whether you declare the full value or not. If you declare them over £18 commercially then they'll be liable for any duties at the end user, if you declare them as a gift over £24 the same applies. 90% of what i receive from China is declared as a gift on the customs sticker.

Personally if you only do a few, send them as a cheap item and don't worry about it. It's not like you're a cottage industry pumping out hundreds a week. What kind of price are we talking?

[sherbertdip]

Thanks for the replies all, they do back up what I thought may be required!

As a lifelong PAYE worker a self assessment does not really appeal, especially for just a couple of grand and not really charging a wage rate, I was hoping it would be more making stuff for "mates" which in fact the majority are!

[johnao]

sherbertdip said:

Thanks for the replies all, they do back up what I thought may be required!

As a lifelong PAYE worker a self assessment does not really appeal, especially for just a couple of grand and not really charging a wage rate, I was hoping it would be more making stuff for "mates" which in fact the majority are!

Talk to an accountant who will set everything up for you with HMRC and explain exactly what records you will need to keep.

It’ll be much cheaper than having to deal with a full blown HMRC enquiry in six year’s time at which point you’ll have to pay an accountant to sort out the mess you’ll be in, plus HMRC tax, penalties and interest.

Do it properly and you’ll be able to sleep at night and will be cheaper in the long run.

[Escapegoat]

sherbertdip said:

Thanks for the replies all, they do back up what I thought may be required!

As a lifelong PAYE worker a self assessment does not really appeal, especially for just a couple of grand and not really charging a wage rate, I was hoping it would be more making stuff for "mates" which in fact the majority are!

There are - of course - a squillion people doing this and hoping HMRC never spots it. (Ebay is full of bedroom traders who hope to fly below HMRC's radar forever.)

If your stuff is good, and word gets out, then why not try to make a business out of it? Of course, that means charging a reasonable price to offset the overheads and the grief of filing a return.

[lost in espace]

Exempt up to a grand. You still have to file a return though.

The trading allowance is a tax exemption of up to £1,000 a year for individuals with trading income from: self-employment

[johnao]

Escapegoat said:

There are - of course - a squillion people doing this and hoping HMRC never spots it. (Ebay is full of bedroom traders who hope to fly below HMRC's radar forever.)

Agreed.

Many years ago I had a client with a similar, small, home-based business generating a few thousand pounds. I pursueded him to have formal accounts prepared. The accounts showed a loss for tax purposes which I was able to claim as losses to be carried forward and set against future taxable profits.

Subsequent discussions with the Inspector of Taxes revealed that the Inland Revenue (as it was known in those days) had a note on the client’s tax file that he was trading... they had picked up the information from the client’s website. They were going to follow this up later if the client hadn’t declared his trading activities on his next tax return.

[davepoth]

It really isn't too much of a ball-ache to fill out the tax return - about an hour the last time I did one, and I was in a roughly similar position (PAYE plus about a grand in self employment). Make sure you've got your login sorted out first though, as that's not instant.

[Sheepshanks]

What's the function of these "parts"? I'd be far more concerned about product liability than HMRC.

[sherbertdip]

Function is aerodynamic aid, non-safety critical and attachment would be purchasers responsibility by a variety of means most suitable to them. Value, that is a difficult one, manufacturing materials and disposables would be in the region of £150 a pair for me to buy, then comes the thorny question of how much "beer money" as making them is very labour intensive probably taking up to 10hrs a pair.

As for HMRC and exporting paperwork, I can see that the hassle for volume of numbers just isn't worth it specially if an accountant should be used.

Taking into account that i do have a full time job and if HMRC were involved and taxed my extra income then I'm immediately 40% down on anything I charge.

[dacouch]

Sheepshanks said:

What's the function of these "parts"? I'd be far more concerned about product liability than HMRC.

Especially if these are being exported to America

[Dammit]

Licence the design to someone like Ruckus Composites? They're US based.

EU is simple apart from the HMRC aspect, unless we do actually leave when it won't be anymore.

[johnao]

sherbertdip said:

Function is aerodynamic aid, non-safety critical and attachment would be purchasers responsibility by a variety of means most suitable to them. Value, that is a difficult one, manufacturing materials and disposables would be in the region of £150 a pair for me to buy, then comes the thorny question of how much "beer money" as making them is very labour intensive probably taking up to 10hrs a pair.

As for HMRC and exporting paperwork, I can see that the hassle for volume of numbers just isn't worth it specially if an accountant should be used.

Taking into account that i do have a full time job and if HMRC were involved and taxed my extra income then I'm immediately 40% down on anything I charge.

Price: This is determined by how much the market is prepared to pay for the product vis-a-vis the manufacturing costs plus the minimum amount you are prepared to accept for 10 hours work.
If the market is not prepared to pay the cost of manufacturing plus your minimum acceptable labour cost then the business is probably not worth pursuing. However, if it is, then it is up to you to test the market and charge a premium price for a premium product.
My advice is that when you have done the sums only pursue this business if it will give you an acceptable return for your labour. Do not embark on a vanity project where you’re working all hours for little financial reward.

The manufacturing costs are already determined. Only you can decide whether or not the selling price will be sufficient reward for your labour.

HMRC tax @ 40%: You mention that you will be... “40% down on anything I charge”. You won’ be taxed on “anything” you charge. It’ll only be on your profit, which in this case will equate to your labour. Apologies if that’s what you meant by “anything”.

Hope that helps a little bit.