Game dealer nightmare!

[Alantoo]

I think that we may be at cross purposes here. In the ordinary course of events a business would declare both income and expenses. That is not the matter that I am addressing.

It was suggested in an earlier post on this thread that a recreational stalker who defrays the cost of his hobby by selling some venison has to register as a business and self-employed. This is not necessarily the case as HMRC will only become interested once a net income occurs. If you are in a perpetual loss making situation with your stalking hobby HMRC will not allow you to offset this cost against a totally unconnected profitable business activity.

This has recently occurred on the Isle of Wight when an acquaintance attempted to offset a loss making small scale livestock enterprise, which HMRC deemed to be a "hobby", against a profitable retail activity. The outcome was an in depth HMRC investigation, penalties, interest and a large unexpected tax bill.

atb Tim

It is slightly more cross purposes than that I think.

The registration that MS was referring to which enables you to legally sell to an AGHE under the Wild Game Guidance was not with HMRC as a trading business but with your local Environmental Health department as a food business.

As I pointed out, if you read Paragraph 17 of the FSA document, it is not just if you sell to an AGHE. You do not have the option to sell any venison to anyone, whether and AGHE, a butcher or Mrs Bloggs down the road without registering as a food business. Regardless of quantity.

It will be interesting to watch the FSA/EH fight it out with HMRC if what you say is true. One side defining a business as "any sale" and the other as only a business if in profit.

I wonder if your IOW acquaintance's example is not appropriate in that their retail business was not personal i.e. a Ltd Co. or PLC? But I am surprised anyway, given that so many country estate / small farms have been bought by successful businesses as a tax loss, maybe the HMRC has closed that loophole.

As a self employed sole trader registered for VAT in my metalworking business any income I receive has to be declared. Although the hobby issue means that I will not claim against stalking related expenditure unless I start to sell venison or outings, it certainly will not prevent me from claiming as soon as I do have any income, profitable or otherwise.

Alan

Interesting thread, I wonder if the OP has received his money yet?

 

[bewsher500]

As a self employed sole trader registered for VAT in my metalworking business any income I receive has to be declared.

big difference between operating as a registered business with a VAT number and offsetting costs of a hobby/pastime through the sale of end material.
legality of selling venison aside....anyone making a profit selling venison from recreational stalking is either shooting an awful lot or doing a very good job of keeping costs down. (or lying to themselves like I do about how much this pastime actually costs!)

you really don't want to start totting up, fuel, clothes, rifles, ammo, FAC costs, syndicate/bought days/bottles of whisky for farmers etc etc......

 

[timbrayford]

big difference between operating as a registered business with a VAT number and offsetting costs of a hobby/pastime through the sale of end material.
legality of selling venison aside....anyone making a profit selling venison from recreational stalking is either shooting an awful lot or doing a very good job of keeping costs down. (or lying to themselves like I do about how much this pastime actually costs!)

you really don't want to start totting up, fuel, clothes, rifles, ammo, FAC costs, syndicate/bought days/bottles of whisky for farmers etc etc......

I totally agree, just the point that I was trying to make.

atb Tim

 

[Alantoo]

big difference between operating as a registered business with a VAT number and offsetting costs of a hobby/pastime through the sale of end material.
legality of selling venison aside....anyone making a profit selling venison from recreational stalking is either shooting an awful lot or doing a very good job of keeping costs down. (or lying to themselves like I do about how much this pastime actually costs!)

you really don't want to start totting up, fuel, clothes, rifles, ammo, FAC costs, syndicate/bought days/bottles of whisky for farmers etc etc......

Unfortunately I don't think the VATman sees it that way, they would be suspicious that I was hiding metal sales in invoices purporting to be hobby derived Venison sales in order to avoid VAT.

What I want does not come into it. Unfortunately as a VAT registered Sole Trader I am obliged to keep complete records of all transactions, so I am totting all that up anyway. I do not have any option but to declare all sources of income even if they do not attract VAT.

I really don't understand therefore why you seem to think it is okay for me to pay tax on my income from stalking but not to set the outgoings against tax...

Alan

 

[PointBlank]

I totally agree, just the point that I was trying to make.

atb Tim

But if you don't declare your income/expenditure then you will have the situation like MS states when questions would be asked about BACS payments into your account. Keeping tally of your expenditure also stops you getting taxed 40% of your income.
If your earning an income from the venison, even if you are operating at an overall loss then it is hardly a "hobby"!

 

[Alantoo]

But if you don't declare your income/expenditure then you will have the situation like MS states when questions would be asked about BACS payments into your account. Keeping tally of your expenditure also stops you getting taxed 40% of your income.
If your earning an income from the venison, even if you are operating at an overall loss then it is hardly a "hobby"!

Absolutely.

The notion that in order to qualify as a business there has to be profit is specious.

Over the last 40 years of trading, my profitability has fluctuated enormously, depending on commissions coming in. I have had to pay higher rate tax some years and thousands in VAT some quarters but have had some years and quarters where I have paid no income tax and received thousands back. I have to keep the same level of bookkeeping whatever the profit or loss.

Alan

 

[timbrayford]

Absolutely.

The notion that in order to qualify as a business there has to be profit is specious.

Over the last 40 years of trading, my profitability has fluctuated enormously, depending on commissions coming in. I have had to pay higher rate tax some years and thousands in VAT some quarters but have had some years and quarters where I have paid no income tax and received thousands back. I have to keep the same level of bookkeeping whatever the profit or loss.

Alan

I can see that some of you are struggling with this, allow HMRC to clarify:-

http://www.hmrc.gov.uk/manuals/bimmanual/bim20090.htm and HM Revenue Customs:Selling items online, through classified advertisements - Examples

atb Tim

 

[Alantoo]

I can see that some of you are struggling with this, allow HMRC to clarify:-

http://www.hmrc.gov.uk/manuals/bimmanual/bim20090.htm and HM Revenue Customs:Selling items online, through classified advertisements - Examples

atb Tim

It is all in perception, I do not think I am struggling. It is quite clear to me...

Those links did not seem to be appropriate. They were to do with buying and selling rather than provision of service as in guided stalking, or venison produced as a result of expenditure on equipment, leases etc. Following the the links further through though this bit seemed appropriate:-

‘The meaning of ‘trade’ is not defined by statute but has been explained as meaning “operations of a commercial character by which the trader provides to customers for reward some kind of goods or services”: Ransom v Higgs [1974] 1 WLR (50TC1) at p1600 per Lord Reid. The commercial character of a transaction is normally determined objectively by the nature of the transaction itself, i.e. is it a transaction of a kind similar to transactions of the same nature in the commercial world and carried out in a similar way?: Livingston v. Commissioners of Inland Revenue 11TC538 per Lord Clyde at p542. However, it is established by authority that, in addition to such outward badges of trade, the transactions must have a commercial purpose: F.A. and A.B. Ltd. v Lupton[1972] AC 634 (47TC580); Coates v Arndale Properties Ltd. [1984] 1 WLR 1328 (59TC516).’

The iPad would not let me copy the text regarding whether something was a hobby or trade, it is not definitive. A simple search on the HMRC site brings up a couple of paragraphs which suggests that it is by size of supply and intention. They also state that many successful businesses develop from hobbies.

But at the end of the day I will be following the advice of my accountants rather than that from an Internet forum. Hopefully others will take professional advice for their affairs having maybe been prompted by the exchange here.

Alan

 

[chiron]

What an interesting thread.For my 6 pennyworth I fitted out a cutting room in one of our out buildings got a bespoke chiller and after doing a BASC extension game handling course registered a small food business with my Local Authority who suggested I do a food handling course as well. That was about 6 years ago and so now I have all the tickets whistles and bells if I am asked by my game dealer for details. In that time I have had one inspection by a graduate on work experience who had to be found something to do. Basically all I need to show is a paper trail of qualifications,details of how any beast was handled from shot to final receiver. Its easy - I do it every day for all my crops- i can trace every tonne of wheat that goes into a lorry.

What gets me is that I am never asked for any of this from either the butcher I sell too or the game dealer. One of my stalking buddies sells to a reputable dealer out of the back of his truck after hanging the beast in his garage for a couple of days in the company of his dogs and occasional neighbours cat.Why do we bother?

 

[Klenchblaize]

What an interesting thread.For my 6 pennyworth I fitted out a cutting room in one of our out buildings got a bespoke chiller and after doing a BASC extension game handling course registered a small food business with my Local Authority who suggested I do a food handling course as well. That was about 6 years ago and so now I have all the tickets whistles and bells if I am asked by my game dealer for details. In that time I have had one inspection by a graduate on work experience who had to be found something to do. Basically all I need to show is a paper trail of qualifications,details of how any beast was handled from shot to final receiver. Its easy - I do it every day for all my crops- i can trace every tonne of wheat that goes into a lorry.

What gets me is that I am never asked for any of this from either the butcher I sell too or the game dealer. One of my stalking buddies sells to a reputable dealer out of the back of his truck after hanging the beast in his garage for a couple of days in the company of his dogs and occasional neighbours cat.Why do we bother?

For when it does go udders up?

You've done it exactly how I intend to approach the challenges once I get past the not inconsiderable hurdle of being subject to both listed building and conservation area planning consent to permit construction of a log cabin with a bolt-on larder.

K