Need a bit of advice

[lee_fr200]

In 2008 me and a friend decided to buy a race car/rally car as abit of fun (the money that paid for it I early abroad and I have no idea where my friend got his money from) the car cost 18k as a non runner

Anyway we got bored quickly and my friend wanted out, we tried to sell the car and couldn't so we broke the car and sold all the spares my share was about 30/40k as the car had sequential gearbox and a spare same with the engines and every thing else anyways did this and banked the money over 2 yrs as that's how long stuff took to sell I also wrote receipts for everything we sold

Fast forward to today and the tax man is wanting me to produce bank statements as I was only doing volunteer work between 08 & 09 I'm going to have to explain all that money'

My dad is concerned they will assume I was operating a business but I genuinely wasn't and that I will get taxed and a massive fine, the car I converted back to a road car then when buying a house in 2012 again I split the car and made around 16k for my deposit

I know there's some legal guys on here so will the taxman see this as a business even though it wasnt

[HantsRat]

https://www.gov.uk/government/uploads/system/uploa...

What we consider to be trading
It can sometimes be difficult to tell the difference between trading and not trading.
You are most probably trading if:
• you want to make a profit
• you have bought goods to sell them on
• you sell things often or regularly
• you register as a business seller on an internet auction site
• you sell from a market stall
• you buy things wholesale or through trade suppliers
• you change or improve things before selling them on
• you sell things that you have just bought
• you sell things that are related to another business that you run
• you have borrowed money to pay for the things that you are selling and you need
to repay that loan.

You are probably not regarded as trading if:
• you only sell things to cover your costs
• you sell a personal possession or something that you have been given or
have inherited
• you only make sales occasionally
• you are not registered as an online shop or trader on an internet auction site
• you make no changes or improvements to the items that you sell
•you occasionally sell a personal possession that you have acquired or bought
some time ago.

The 2nd bullet point under not trading covers you. Simply write back saying you were not working or trading in that time. Job done. It's down to them to prove you were not you to prove you weren't.

[Joeguard1990]

So I'm presuming you went halves for the car putting you 9K down out of pocket.

You then went on to make 30/40K, putting you in profit of about 21K minimum.

And you didn't think you would have to pay any tax on that at all?

Have you ever heard of Capital Gains tax?

[SS2.]

Joeguard1990 said:

Have you ever heard of Capital Gains tax?

As long as they haven't been used for business, I didn't think CGT applied to personal cars or personal possessions with a lifespan of less than 50 years.

[Jarcy]

Buy a vintage Ferrari for 1/2 million (personal use). Sell for a £million and no tax to pay. No Capital Gains Tax on personal cars, and indeed one of the most tax efficient investments. Otherwise I would be claiming CGT relief on every car that I've ever owned that ended up depreciating on me.

[Honestherbert]

I was wondering this the other day, what happens to unintentional profit on items like these? I have a shed full of car stuff going back ten years or more, some of which has gone massively up (and down!) in value. If I sold it and banked the money, say £10k, over the next 6 months would I be chased for tax?

[flemke]

Honestherbert said:

I was wondering this the other day, what happens to unintentional profit on items like these? I have a shed full of car stuff going back ten years or more, some of which has gone massively up (and down!) in value. If I sold it and banked the money, say £10k, over the next 6 months would I be chased for tax?

Search for "HMRC capital gain chattels".

Basic idea is that personal cars are exempt from CGT. Other chattels (movable property) are generally not exempt, but there is an exclusion of £6k gain per item.

[RP1]

What car was it!?