Hi everyone my name is Ola Sulaimon and
today I’m here to ask you a question. Is your activity a hobby or trade? Now what is a hobby? A hobby is something which you enjoy doing all the time with
direct pleasure from doing it. It’s an activity we do and we enjoy it without being paid for it. A trade is not defined by legislation, that’s the major problem here is defined
by case law so they’re giving us questions, different tests which is referred to as badges of trade to be able to test and know if we are actually trading or not trading. Now you’ll be thinking should I worry myself about this or not? When your hobby turns to a trade, you’re supposed to inform the
revenue and customs about it so I’m gonna ask the questions and if you’ve got a hobby just
ask you ask yourself the question as I’m going to ask you. So number one; is there a profit motive in this hobby? Do you get paid for it? Do you start thinking about
the money you get paid for it? Number 2, how often do you carry out this activity? Is it daily, weekly, monthly, once in a while? Number 3, do you modify this item?
Probably a car to make it look nicer, to make it more sellable, to make
it sell on time? Number 4, do you have a system in place? For example, the
way you market it, you’ve got an office or a shop? Or anything to make the item quicker, easier to sell. What is the reason why you got this item
initially? Or why you started this activity initially? Number 7, what is the nature of this asset? Number 8, is this activity connected to your main job? Is it related in any way? Number 9, do you have a financial agreement in
place? If your answer is yes to any of those questions, congratulations, you’ve got yourself a business! Most likely, you’re trading and therefore
you’re supposed to inform the revenue about this trade within six month after
the end of the tax year. Also, you’re expected to submit a self-assessment return, which
if you submitted a paper, will be done by 30th October or
31st January, if you’re submitting online. Also, if you’ve made a profit,
profit is not what you’ve actually been paid. It is what is left after you have deducted your expenses from your sales Your expenses, you still need to pay tax on that as well. Now, if you can’t be bothered by everything I’ve said so far
and you’re not sure or you decided to make your answers all “no”, that’s fine.
When the Revenue finally catch up on you, the penalties will be based
on the unpaid tax for several years. Usually, they won’t come to you in the first year. Usually they leave it for almost four years and assess an accumulation of financial information. Now, my advice for you today is rather than making this hobby that you enjoy so much a burden, to think about these
questions and make an action about it. And, actually make the business worthwhile
rather thinking of the tax bit of it. Thank you.