Tax Guidance for an E-commerce Business Run by a Minor

[Kquerys]

Hello, I am 14 years old and have recently started a small business selling goods on eBay. Since eBay requires account holders to be 18 or over, the account is registered in my parent’s name and linked to their bank account, with their personal details such as name and National Insurance number used for the setup. However, I am managing all aspects of the business independently and cover all expenses. Although the income is initially received into my parent’s bank account (due to eBay’s requirements), all proceeds are subsequently transferred to my own account by my parents. I am keeping accurate records of all income and expenses, and I plan to register for Self Assessment in my own name once my trading income exceeds the £1,000 trading allowance, so that I can declare and pay any tax due. My concern is that, because the eBay account is technically in my parent’s name (with their personal details attached), the income may appear to belong to them and could be treated as their taxable income instead of mine. Could anyone advise on how best to make sure HMRC recognises this as my business, and that the income is correctly attributed to me rather than my parent? Is this even possible given that the account is in my parent’s name but I would be the one filing the tax return? If not, I would greatly appreciate any advice on alternative tax arrangements that might work, other than having everything filed under my parent’s name. Thank you in advance.

 

[Ozzy]

HMRC are more concerned about who the beneficial owner of the business is than who holds the account with eBay. In the 'additional infomration' box when you register for Self Assessment that may be where you'd detail the account with eBay is held in your parents name and their bank to meet with eBay's terms and conditions.

So long as you are maintaining accurate records of your business activities, as you explain, as well as records with any relevant suppliers where you are communicating with them, this should be sufficient evidence for HMRC should they ever raise a query.

Good on you!

 

[fisicx]

@Kquerys - you also may need to get an eBay business account which in turn will require a business bank account.

If the eBay algo thinks you are running a business through a personal account they will shut you down.

 

[MyAccountantOnline]

HMRC are more concerned about who the beneficial owner of the business is than who holds the account with eBay. In the 'additional infomration' box when you register for Self Assessment that may be where you'd detail the account with eBay is held in your parents name and their bank to meet with eBay's terms and conditions.

So long as you are maintaining accurate records of your business activities, as you explain, as well as records with any relevant suppliers where you are communicating with them, this should be sufficient evidence for HMRC should they ever raise a query.

Good on you!

I've never dealt with this scenario as an accountant but that sounds good advice to me. And a second Good on you! Well done and enjoy it.

 

[Kquerys]

HMRC are more concerned about who the beneficial owner of the business is than who holds the account with eBay. In the 'additional infomration' box when you register for Self Assessment that may be where you'd detail the account with eBay is held in your parents name and their bank to meet with eBay's terms and conditions.

So long as you are maintaining accurate records of your business activities, as you explain, as well as records with any relevant suppliers where you are communicating with them, this should be sufficient evidence for HMRC should they ever raise a query.

Good on you!

Thank you for your advice,

Would you recommend informing HMRC of the arrangement in advance (for example, by writing to them by post) so it is already on record, or is it generally sufficient just to explain it in the ‘additional information’ section when I register for Self Assessment?

 

[Kquerys]

Thank you for your advice,

Would you recommend informing HMRC of the arrangement in advance (for example, by writing to them by post) so it is already on record, or is it generally sufficient just to explain it in the ‘additional information’ section when I register for Self Assessment?

My main concern is that, under the digital sales reporting rules for online marketplaces, eBay will report the income to HMRC under my parent’s NI number. As they would not have declared this income, I worry it could automatically trigger confusion and possibly lead to an audit.

 

[Ozzy]

or is it generally sufficient just to explain it in the ‘additional information’ section when I register for Self Assessment

My understand is this, above, but I am no accountant and this is just what I'd suggest as 'forum advice'. An accountant would be better qualified to answer this with more information.

 

[MyAccountantOnline]

My main concern is that, under the digital sales reporting rules for online marketplaces, eBay will report the income to HMRC under my parent’s NI number. As they would not have declared this income, I worry it could automatically trigger confusion and possibly lead to an audit.

It'll be interesting to see how many HMRC Enquiries are commenced as a result of EBay reporting.

In this case I dont really see it as an issue provided full records are kept of all transactions.

 

[Karimbo]

I was going to say to OP to apply for an NI number now and register for self assessment and file your returns and on the returns on the comments box, declare that the revune comes into parents accounts [name them] so if they are investigated for selling on a marketplace without declaring they are self employed, the return would cover that.

However based on googling it seems that you cannot apply for an NI number at 14, you have to wait til youre 16. If you can't get NI number then, does that mean it's illegal for you to work? Or does it mean you can work tax free?