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Thread: Scrap Service

  1. #1
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    Default Scrap Service

    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.

  2. #2
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    I'd need to double-check, but I'd have expected an account credit to have to be declared as income too.

  3. #3
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    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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  4. #4
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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
    Neil

  5. #5
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    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
    Author: Pearls A Practical Guide
    www.pearlsapractical.guide
    www.Pearlescence.co.uk

  6. #6
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    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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  7. #7
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    Default

    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
    Neil

  8. #8
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    Jun 2014
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    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.

  9. #9
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    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.

  10. #10
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    Quote Originally Posted by Stacey View Post
    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.
    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.
    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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