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I just wanted to put something on here about my disappointment that whenever I send off scrap, I always tick the box to have credit on my account rather than a cheque. If I get a cheque, I have to declare it as income. Why, then to I always get a cheque? Something in your system needs addressing please Cooksons.
I'd need to double-check, but I'd have expected an account credit to have to be declared as income too.
A credit is definitely income - you should declare it as such. That it is harder for HMRC to trace it as income doesn't change the fact that it is unquestionably income as it is from a sale of goods.
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not sure if it should be treated as income. if you spend £10 on silver of which due to manufacturing methods produces £2 of scrap, you don't pass on the cost of the scrap to the customer. if you could i'd be buying 3 time the required amount and passing the cost on.
if was to be treated as income you would have to deduct the costs of refining it anyway. so if you have some scrap refined you pay tax but if you re-melt and reuse the silver you don't?
Are you not losing money because you are not getting the full value of the scrap back anyway.
As always I sit to be corrected.
Neil
If money comes to you or you get money set into an account to your benefit due to your selling something, it is income.
It isn't a matter of passing a cost on to a customer but the money coming to you from what you have sold to the scrap processor, who pays you for it
I cannot understand the confusion over this - you have sold something to another person - it doesn't matter that it is "scrap" or the result of manufacturing waste, and for that sale you have received a benefit. In UK Law it is income in the course of a trade and must therefore be declared as income.
The benefit doesn't have to be actual cash, as in this case it is a credit on an account, it is a sale.
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So you need to send the scrap or manufacturing waste to the refiner and get them to return the refined material. then you will not be receiving a benefit you will be paying for a service. So are you also paying to have your scrap refined is income! melting it down yourself to reuse is not. so using your own words "income in the course of a trade must be declared" in my words "paying to have your silver refined is an expense". I suppose the difference is "Selling the Scrap (income)" or "refining and returning your own material (expense)"
I give them £50 worth of material, they give me £50 worth back and charge me £30 pounds for doing it. so either way the income derived is not £50 I've paid for a service.
So don't sell it, get it refined.
Neil, Ex flying silversmith now a motorcycling silversmith. at lest i don't need to keep riding my bike to keep my driving licence current 8-)
There
I'm not an accountant, but if you are a business and sell scrap you are actually making a loss. You bought raw material at full cost. You return unused material and are paid a) less than the original value and b) an administration charge.
Scrap is a waste material with a residual value. You buy raw material, create product and sell the product to cover the full cost of the raw material. You then have as small a pile of waste as you can manage. Once you have accumulated enough waste (which costs to gather and store) it is sent off for processing.
As far as making a loss goes, you're only paying to recover the value of a waste product that you can't process yourself. Offcuts that are large enough you can use elsewhere, do so and don't pay to have usable material processed. Bench sweeps, broken saw blades, polishing waste are more difficult to do so it's worth paying for someone else to deal with it.
What is so difficult to understand that if you sell something in the course of business it is INCOME, whether you made a profit or loss on that sale is not the point for the purposes of declaring it as INCOME.Quote:
Originally Posted by Stacey
The claim in the opening post is that if it is a credit on your account then it doesn't need to be declared as income, but if you received a cheque then you do, this claim is incorrect.
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An additional point - if you receive metal back rather than money, then that still gets declared. Your books should show value for raw materials held as well as stock, so the addition to that will show up.
You wouldn't believe how much computing power HMRC now has at its disposal - and if they decide you're defrauding the tax payer (with whatever pattern they decide constitutes evidence) then they can shut you down very quickly and with remarkably little judicial oversight.
Not so much income tax bods, who have usually been helpful, but the VAT people ...with powers which exceed the police's and which are not subject to half as much control..you don't want to irritate them.
If there are pieces of paper, there is a paper trail.
(Mind if they ask about my scrap I re0cycle a lot of it and the rest just sits in a box. Hardly seems worth sending off the silver)
All part of HMRC, and when IR merged with HMC they ended up with a lot of new power and very few checks and balances.
yes. Also includes Border Force who take £££ off me for VAT every time I come back from Hong Kong. But every one of them sucks his teeth and says I've filled in the form wrong when all I do is what I was told to do by the last tooth-sucker last time.
I am still not convinced that if I send silver off to be refined and then get silver back it should be classed as income. To me its just recycling what I already own.
Of course it isn't income, you are paying for a service on materials you already own.
If you are selling scrap for cash you receive money, that is income.
If you send your scrap to be processed and made back into sheet or wire or whatever then it is expenditure -shipping and processing fees of your own silver
So you send your scrap & get paid however & you then spend it all on new materials/tools..so what?
Your only going to pay tax on any profit you make, which you probably aren't.
A few hundred in & a few hundred out = 0
Plus your receipt for postage will leave you on minus which is good.
If you want to keep your money gained for something else like Xmas presents then thats abit different.
It's not rocket science :rolleyes:
It isn't income - you are PAYING someone to carry out a service for you = expenditure.Quote:
Originally Posted by caroleallen
If you are selling your scrap (not sending it off to be refined) then it is income.
Why is this so difficult to grasp? Your opening post was about SELLING your scrap (not having it refined) - this is INCOME whether you get a cheque or a credit note.
If you sell some rough wood then it is income. If you send your wood to be planed and made into planks then it is an expense - same principle.
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Carole, I would suggest phoning your local tax office (before they get shut down) and asking their advice on the situation. That way you can get the correct answer (or at least the current interpretation of same) rather than any of our interpretations.