buying in bulk then selling on

[BobbyBobBob]

A friend of mine had an idea to buy a product in bulk from a legitimate warehouse retailer (website) for a cheaper price than normal and then sell online to try and make money. How does the tax work if he were to do this??

Ie......if he were to sell about 15-20 of the same item, he would effectively become a business and would therefore need to pay tax. Is this correct and how does it work?

thanks

[Skyline D]

If he buys a single item with the sole intention of selling it on for a profit he is ipso facto a business and technically should register as such with the Revenue. There's no need for multiple transactions before it becomes a business. You can buy something for yourself, use it, decide you don't want it any more and sell it on without paying tax even if you make a profit. That's quite legal, but if the intention at the point of purchase was re-sale at a profit then you are trading.

What should happen is you register with the revenue and do an annual tax return of profits less any allowable expenses (internet costs for instance). If it's making enough money it might be worth incorporating as it may save tax.

In practice, if your mate buys 15 items, sells them on for a profit once and never does it again it's doubtful anyone would ever notice. If he doesn't volunteer the information he'd never be found out. However the Revenue do have people scanning the web and especially ebay for such things and he might be.

[R1Geezer]

You're are taxed on your income from all sources. Any declared profit net of exes is added to income and taxed as such,