Sale of personal possessions; treatment for IB JSA

Hi all

The sale of personal possessions and the effect on benefits has come before on Rightsnet: see
https://www.rightsnet.org.uk/forums/viewthread/9971/#45470
https://www.rightsnet.org.uk/forums/viewthread/14255/

I am wondering what is likely to apply in my clients case. 

The client is a self-employed worker in receipt of income based JSA.  Currently being investigated for undeclared income going back to 2015/16.  The client has also been selling personal possessions on Ebay and similar for the past 6 years.  Sales amount to between £1000 to £6000 per year –in total for the 6 years, around £35k.

The client is registered as self-employed with HMRC for the work and has also been including the sale of personal possessions as part of their annual turnover.

I assume that the sale of personal possessions will be considered income in this case?  Any way of arguing not?

EKS

Not necessarily.  This is really a job for regular poster Charles - it’s very much his field of expertise - but a useful starting point is this summary of the “badges of trade”:

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim20205.

My first reaction is that if someone declares ebay sales as income for tax purposes they must be pretty sure in themselves that it was business income - what is there to gain from over-declaring income for tax?  I suppose it could be:

- to demonstrate genuine work for WTC and/or right to reside purposes
- to attract Class 2 NI liability and protect future state pension entitlement

I find the “badges” summary useful, and each one is supported by further in-depth commentary

Not got much to add, but to clarify, are you saying your client has a ‘real’ online selling business, but has also included the sale of personal possessions when accounting for their profits to HMRC?

In general selling personal possessions wouldn’t normally count as income, but they may have a job getting DWP to accept that if they’ve been including it in their tax returns.