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  • hi i`m new, do you need to prove your a business

    Hi i have lots of items to sell and wandered if i do a craft fair do i have to be a business,as i don`t think most crafters are and i do this as a hobby but wouldn`t want to sell and get in trouble..any advice please.

  • #2
    Hi & welcome to the forum!

    Whether you're asked for proof of business status (by this I assume you mean being self employed, a registered company, VAT reg'd or similar) depends on the craft fair organiser, although I haven't personally come across it before. Some ask for proof of insurance so you're covered if there are issues with the items you sell.

    Whether you should register with the HMRC as self employed depends on whether you actually make any money but I would suggest ringing the HMRC helpline and explaining your set up to them; generally they're helpful. As I understand it, you have 3 months from the point you start trading to register with them too but again check with them first as these things change.

    Good luck with your venture.
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    • #3
      Have a look here at the links on my blog they tell you all the info you need to know
      http://www.craftsforum.co.uk/showthr...craft-business
      full time mum and very very part time crafter.

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      • #4
        Firstly to the forum.

        You should definitely get yourself Public Liability Insurance as this covers you for any claims of injury caused by your stall, your products, etc. Most reputable organisers should request seeing a proof of this before accepting any booking. It doesn't cost a fortune but can save you one if there did happen to be a claim made against you! It is important to register yourself as self employed with HMRC as soon as you start making sales (even if you already have a full time job). It doesn't matter if you are in profit or make a loss after all your costs are taken off, this will all get sorted out at the end of the year but officers can (and do) visit places like craft fairs (and look at small ads in magazines where people advertise their businesses) and if you may end up being fined if you haven't registered within 3 months of starting to sell your goods. Do double check your contract of employment (if applicable) as some companies don't allow employees to have another 'job' even a self employed one and you don't want to fall foul of your employer and risk losing your daily bread and butter!

        It is always best to start off properly even if it is just a hobby at the moment as if things go well, it may turn into more later and it is best to start as you mean to go on!

        Good luck with your new venture.
        Ali x

        Etsy Shop: aliscraftstudio.etsy.com
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        • #5
          I echo Alicat's post

          In relation to having three months to register with HMRC once you've started trading (if money changes hands for your products, even if primarily to family/friends or if you see it as a hobby, HMRC will want to know), I have a feeling that this has now been done away with, and you must register as soon as you start trading. Seem to remember it's been a recent change in HMRC's rules, and is something I make all our traders aware of.

          Sarah Gail Designs
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          • #6
            Originally posted by muffin789 View Post
            I echo Alicat's post

            In relation to having three months to register with HMRC once you've started trading (if money changes hands for your products, even if primarily to family/friends or if you see it as a hobby, HMRC will want to know), I have a feeling that this has now been done away with, and you must register as soon as you start trading.
            Their website says that you must register 'as soon as possible' after opening your business. However, on this page, it says From your trading start date you have three months to notify HMRC that you are trading, otherwise you could face a £100 penalty..

            There is a great deal of extremely useful information on both the HMRC and Citizens Advice Bureau websites for anyone wondering what they have to do to start a small business, or wondering if they are actually running a business at all. I have also found HMRC to be very prompt and helpful at responding to email queries.

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            • #7
              If I remember correctly from my last tax return, if your turnover is less than £15,000 you can provide a simple account to show what you have earned.

              Personally with so many people trading on eBay, boot fairs, farmers markets, craft markets, local shows and events, it is impossible for HMRC to know who has an additional source of income. So the best way for the taxman to find out is to wave the big stick and threaten fines to frighten people to declare they are running a business.

              So stonesilver I would keep quiet if it is a hobby, however if it is going to be you main source of income then you will have to become self employed and face completing a tax return every year (or pay an accountant to do it for you). You may find whatever you declare may be challenged by the tax inspector, I personally have had 2 tax investigations. Both were time consuming to deal with and in neither case did they raise any more tax. One was so far off the scale of reasonableness that an official complaint was made and the tax inspector was moved to another department.

              Hope this helps, but personally for the time being do not contact them until you know more about how your sales are going to go.

              Roger

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              • #8
                Sorry Roger but that information is so wrong, once you exchange money for goods you are a a business and as such should be legal, do you not think that HMRC check these forums, they are open to the public and can show on search engines. I have never had a tax audit and have always found the HMRC very helpful to actively encourage someone to go against the law is totally irresponsible plus extremely unfair on us that are legal and do things properly.

                I also cannot see what is the problem with being leagal, if you don't earn enough you will not have to pay tax, what gives anyone the right to be different and not abide by the laws of the land, this is why we are in a mess due to selfishness with some in this country who think they are above the law and everyone else can pay.

                Stonesilver do the right thing the returns are simple and if you earn below a certain limit you do not have to pay the NIC stamp.
                Last edited by Caroleecrafts; 29-06-2011, 02:23 PM.

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                • #9
                  Originally posted by keystamp View Post
                  Personally with so many people trading on eBay, boot fairs, farmers markets, craft markets, local shows and events, it is impossible for HMRC to know who has an additional source of income. So the best way for the taxman to find out is to wave the big stick and threaten fines to frighten people to declare they are running a business.
                  Originally posted by Caroleecrafts View Post
                  do you not think that HMRC check these forums, they are open to the public and can show on search engines.
                  The taxman is currently having a big crack down on small businesses that have not declared with their main focus being on online activity - I have been told this from a very reliable source. And yes they do also visit craft fairs so you never know who you're handing out that business card to.
                  Visit Natty Netty for a huge selection of Iris Folding supplies

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                  • #10
                    Originally posted by nattynetty View Post
                    The taxman is currently having a big crack down on small businesses that have not declared with their main focus being on online activity - I have been told this from a very reliable source. And yes they do also visit craft fairs so you never know who you're handing out that business card to.
                    I have been at one of those fairs Netty and a stallholder left red faced that was after bragging to all the other stallholders that they only did this as a 'hobby' so did not register, funny they arrived that day not certain but think someone tipped them off not me but they could have had a spy in their camp. Nothing annoys genuine craft business's more or any business for that matter having someone trying to get away with it.

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                    • #11
                      If you are below 15k you can fill in the short return. Still have to be registered etc.
                      To be exempt from NI contributions, you do have to apply and have an exemption certificate otherwise you are liable for payments.
                      full time mum and very very part time crafter.

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                      • #12
                        I have looked at the legal side of this more since writing this infact up most of the night and i can see how so many businesses are going bust as the rates etc are so high. i will have to put my business plans on hold until;l the time is right sadly... i don`t want to break the law as i ahev a young family but do also love the fact that i can have a hobby that other people also could benefit from.

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                        • #13
                          Originally posted by Caroleecrafts View Post
                          Sorry Roger but that information is so wrong, once you exchange money for goods you are a a business and as such should be legal, do you not think that HMRC check these forums, they are open to the public and can show on search engines. I have never had a tax audit and have always found the HMRC very helpful to actively encourage someone to go against the law is totally irresponsible plus extremely unfair on us that are legal and do things properly.
                          Caroline, I may not have been a member of this forum for as long as you but I have been self employed for 32 years. There is a very grey area between selling personal items, selling a few hobby craft items and running a full business. I have seen a huge number of hobby picture framers who never informed the tax authorities and were never found out - despite some limited advertising. I am trying to point out that until you are trading on a regular basis, it is going to cause more problems for someone testing out a whether a hobby can earn some money. If you are already in PAYE you will then have to start filling out a tax return. If someone has a form phobia then they will have to employ someone to complete the tax form them. Also once on the tax system it is difficult to come off it, so during a trail period I still do not think it necessary to declare anything. You must declare it if you have been trading, before 3 months has passed - as eeseesee posted.

                          Stonesilver, the original poster, did say it was a hobby and from that I read he is not looking to make huge sums of money. He will probably find he will be lucky to break even once all his costs are taken into account. A very similar situation to many more crafters who post on this forum that either they are only hobbyists or other sellers are hobbyists.

                          Roger

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                          • #14
                            What do you think us leqal business's are doing some of us are only breaking even does not give us the right to say, oh well I will not do a tax return then make it a hobby instead. What about insurance do they not have to bother with that either, wait until a problem them they are sued and could lose their homes, then be on here moaning about life being unfair. At the end of the day the laws of the land are just that, the tax forms are simple others on here who have registered have found them easy, not rocket science. Sorry but I do not agre with underhand trading gives others in the same field a bad name and have spoken to a friend who works in the HMRC and yes they do check forums and websites as Netty said, they look for the wording of self employed, tax issues etc so can be found out, not worth it.

                            A hobby is something you do for pleasure not for money, once money exchanges hands no longer a hobby but a business
                            Last edited by Caroleecrafts; 29-06-2011, 04:09 PM.

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                            • #15
                              We tend to have this discussion every few months or so.

                              The bottom line is if you sell what you make (regardless whether you are making a profit or not) you MUST register with HMRC within 3 months of making your first sale. This applies if you sell to friends, at a craft fair, your own website or on ebay etc. Yes some people won't be doing this but they are at increasing risk of being caught and fined and the forum certain can't be seen to condone such behaviours.

                              Of course one benefit of registering is that if you already pay tax on your employed job you can receive a tax refund if you make a loss which many businesses will in their first year.
                              Visit Natty Netty for a huge selection of Iris Folding supplies

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