When does private buying/selling become dealing?

[Mudster]

With all these auction listings appearing I'm curious to how many cars can you buy/sell in a year before you're classed as a dealer?

I'm not particularly interested in making a living doing this, I have far too much on my mind keeping the current business running in this economic climate.

However I get terribly bored with cars very quickly, so if I buy at auction I then get to drive something interesting for a while then sell it on. The hope here is I sell at what it cost to buy at, or if I'm lucky, a little more.

I have a vague memory of this being 6 cars a year? as long as I keep under that I'm a private seller.

Is that still the case? I don't want to unintentionally fall foul of trading laws.

 

[Ian B Walker]

I am led to believe that the total cars sold in a 12 month period must exceed 5 to be called a trader. Jaymanek would be better informed though.

 

[bigstuff]

i was told the same but it was over 20 yrs ago by my insurance

 

[The Dent Guy]

As far as im aware you are allowed to sell up to 6 cars in any 12 month period before being classed as a trader. In addition, im sure they are all supposed to be registered and taxed and insured in your own name too.

 

[Ian B Walker]

Insured yes (traders policy cover this) taxed I am not sure of. SORN may be an option though.

 

[NicDale]

Yup 6 cars a year, hence i have now taken out trade insurance, if i'm going to be called a trader i might as well enjoy the benefits of realtively cheap insurance and not having to pay a 'handling charge' every time i change cars. I've already bought and sold 2 Golf GTi's this year, i wasn't looking for either but friends and family know i've a reputation for having Golf's so when there's something for sale i'm usually called, if its cheap enough then i end up buying it.

I certainly don't do it for profit though, i already work 7 days a week so haven't time to be dealing with time wasters, credit to those who can/have to deal with them though!

 

[jaymanek]

im not sure where the official figures come from.

I used to buy and sell long before mercland.

I used to import japanese cars as a hobby and then around 2000 my focus turned to mercs.

Whilst at uni i probably bought and sold a car every two months id say..

It was good fun and made some cash too.. not to mention i was driving CLK's and W124 cabriolets whilst all my uni mates were going home on national rail...

 

[NicDale]

Autotrader were the first people to mention it to me, 6 cars from 1 postcode, obviously they were trying to make me pay dealer advertising fees. I tried the old my brother, father, sister, mother etc line but it didn't wash.

 

[jaymanek]

yes autotrader love to extract as much cash as possible.. but i dont think there are any written rules..

As far as income tax etc, obviously it should all be declared and you would have to pay tax on profits.

 

[Mudster]

I certainly couldn't see it becoming more than one every two or three months so that should be fine.

 

[peterg1965]

As far as income tax etc, obviously it should all be declared and you would have to pay tax on profits.

Can you get higher rate tax relief on loses??

If you could it would ease the pain! I am not a trader but tend to buy and sell my cars very frequently, but am working hard to stop that! I have only ever made a profit on one car, £300 on a brand new 07 plate Focus ST3, which I bought with a HUGE discount (courtesy of Ford) and traded 7 weeks later against a brand new BMW 335d. The BMW dealer underwrote the car to one of their regular trade buyers.

 

[bigstuff]

if you buy at auction you get the full log book & your not on it so it's easy to buy & sell on the side

 

[gina2201]

I ought to slow down on my cars changing hands! I simply get bored so change them, buy them off friends (when going cheap) or get given them or buy a cheap one as a runaround. But I do not do it as a business!

Not sure on the figures either, would be interesting to find out though.

 

[Vlad]

if you buy at auction you get the full log book & your not on it so it's easy to buy & sell on the side

To do this you will have to produce your upto date Trade Insurance certificate otherwise they will fill the log book out in your name and send it off to the DVLA.

The other issue that people need to take into account, is that if you decide to Trade from home, it won't be long before the Council will come knocking on your door asking if you have planning permission to trade from home. Naturally most people don't and won't get it either and if the Trader continues to trade from home or litter the side of the road with cars with For Sale signs in them, they will come down on you like a ton of ****. Well thats certainly the case in Berkshire and judging by the guy down the road from me who tried to trade from home it all turned into a living nightmare.

+ if you are a Trader you are governed by the Sale of Goods act and you also have to warrant the cars, so making a quick buck on the side is not as easy as it first seems.

 

[andy_k]

if you buy at auction you get the full log book & your not on it so it's easy to buy & sell on the side

except that it's your name on the auction receipts should the tax man ever inspect their books.

If you are doing anything on 'the side' you can make more money by registering yourself as self employed (as well as having a full time job) and using all the tax system to your full advantage

 

[Dryce]

im not sure where the official figures come from.

My distant first memory of any rule relating to 5 car sale/year was when there was quite a bit of speculation in classics and one of the advantages of classic cars was the value increases were not subject to CGT. However if you sold more than 5 then you were classed as a trader and subject to taxation on the profit and/or CGT.

There is probably some HMRC note somewhere if you can find it.

 

[big x]

I've had my books inspected by the Tax inspector. The number of cars you buy and sell is irrelevant to them. They are interested in your total income less allowable expenses. It's pointless trying to hide anything from them including cash as they will just make an assessment based on your standard of living and credit card statements. Offshore bank accounts in tax havens are another matter.
If you are selling used cars being VAT registered is certainly in your interests as you can claim vat back on expenses. Vat due on car sales is levied on the difference between your buying and selling price using the margin scheme.

 

[PXW]

As a rule the taxman won't be interested if you're just changing your car very frequently, regardless of whether you use auctions or not. But tax law incorporates certain 'badges of trade' - one of which is frequency. No single 'badge' in conclusive, but a profit making motive is pretty strong. So - if you are frequently changing cars, and are making a profit at it then the taxman may well become interested, especially if you are a regular feature in Ebay ads etc.

Evidence against trading might be that at any one time the vehicle you have is the only vehicle you have available to you for daily use. It all does, as so often I'm afraid, rather depend on the precise facts.

 

[Mudster]

So not as clear as first thought.

In my case, I certainly won't have more than one car at a time, so it's not like I'm going to litter the street with vehicles.

I guess as long as you're reasonable and don't take the pee, then you'll probably be fine.

 

[Adam230K]

I've bought & sold over 30 cars in the same year (while i was at university), and no one ever said anything to me! But i did hear the rule was 11 cars a year... but i was forced to make an account with BCA and then i never had any issues afterwards.