Car sales based from home.

[whitty6]

Hi,

Im looking to move into car sales on a small scale to start with which will mean starting from home.
I am in full time employment at the minute so would be buying/selling as and when i could.
If there is anyone experienced in the field and if so what are the -
a) First things i need to do register a car sales company
b) Financial/ tax implications and organisation i.e. business accounts etc
c) Licences or permits to be based at my home address

Would much appreciate any opinions or help on the matter.
Regards

 

[StevensOnln1]

a) No requirement to form a limited company, you can just register as self employed with HMRC. You can always form a Ltd company later on if it becomes beneficial.
b) You'll need to keep records of all your sales and business expenses and file a tax return each year. You'll declare your business profits as well as your employment income and it will calculate the tax and NI due. If you have sales of more than £79,000 in any 12 consecutive months you will need to register for VAT.
c) You'll need planning permission if you plan to turn your front garden into a sales forecourt.

 

[whitty6]

Hi,
Thanks for your reply much appreciated.

Is there any motor trade licences i would need to have before i started trading and also any insurance? Also is it viable to offer finance if i came to an agreement with a finance house?
There would only be an extra one car on the drive or in the garage at any one time for now would i still need permission to allow for people to come and view the vehicle?
Would i have to set up a business bank account or could i use my private account to buy the cars?

Regards in advance

 

[StevensOnln1]

I'm not aware of any specific licences you need for motor trade, but obviously the cars you are selling will need to be insured and taxed with a valid MOT to be allowed on the road for test drives etc.

One car at a time shouldn't be an issue unless any of your neighbours complain to the council.

Most banks don't allow you to use a personal account for running a business. Opening a business account should be easy enough if you're not looking for a loan or overdraft and you will usually get 18 months free as a new business before the bank starts charging for their services.

 

[Bob]

An example of a potential council problem

 

[whitty6]

Appreciate the help StevensOnln1 thanks.
Thanks for the comment bbbbb would you be able to expand a little on where you see this being an issue.
Regards

 

[Duke Fame]

Appreciate the help StevensOnln1 thanks.
Thanks for the comment bbbbb would you be able to expand a little on where you see this being an issue.
Regards

You cannot openly 'trade' from the roadside. Whilst no council would kick up a fuss if you simply were selling your private car with a little A4 sign in the back window as you drove along, they do not like people parking cars on the side of busy roads with a FOR SALE sticker across the windscreen.

I got through uni "trading" cars, basically buying at auction, driving about a bit until I sold it and went onto the next one. We were only talking a handful a year but it helped. It sounds like you are a novice and it's very easy to get stuck with a lemon. I'd start off in this manner and if you find you are almost earning a living, then register with HMRC etc but until you have sold a few cars, you are just a bloke who's sold his car.

 

[whitty6]

Hi Duke Fame
Thanks for your message
I would have only one car at a time at the minute which would be kept garaged or on a gated driveway so shouldn't see an issue with the council.
I was asking the question regarding whether to start as a company as generally you customers feel a lot more protected by this and are more inclined to buy from a trade seller. Also I would like to sell mid range priced cars and this being the case most customers would buy using finance, this is a service I would like to be able to offer.
Also in your experience bedsides the auctions what are the other successful ways of sourcing cars to sell?
Thanks

 

[AmazingGiftBoxes]

You also need to remember about sales of goods act ( I think it is the right name) :

When you buy a used motor vehicle from a trader, you enter into a legally binding contract. You are entitled to expect that the vehicle is of satisfactory quality, fit for purpose, and as described. An older vehicle with high mileage may not be as good as a newer vehicle with low mileage, but it should still be fit for use on the road and in a condition that reflects its age and price.

Traders must not mislead consumers by using phrases such as 'sold as seen' or 'no refunds'. If you buy a used vehicle from a trader online, you may have additional rights under the Consumer Protection (Distance Selling) Regulations 2000. You do not have the same legal rights if you buy a vehicle from a private seller or from an auction.

If the used vehicle is faulty, you may have a short time after buying it to reject it for a full refund. You may have other remedies such as repair or replacement. You should write to trader you bought it from, confirm the details of your complaint and the remedy you are seeking and keep copies of all correspondence. As a last resort, you may need to consider taking court action. Bear in mind that used vehicles may have some faults, but they should not be excessive. Fair wear and tear is not considered to be a fault.

Jerry

 

[Duke Fame]

Hi Duke Fame
Thanks for your message
I would have only one car at a time at the minute which would be kept garaged or on a gated driveway so shouldn't see an issue with the council.
I was asking the question regarding whether to start as a company as generally you customers feel a lot more protected by this and are more inclined to buy from a trade seller. Also I would like to sell mid range priced cars and this being the case most customers would buy using finance, this is a service I would like to be able to offer.
Also in your experience bedsides the auctions what are the other successful ways of sourcing cars to sell?
Thanks

In my experience, trade sellers are not seen as more reliable that a private sale. Arranging finance is all very welland you will get a commission from this and it's something to consider once you are successful.

Although I Agee with the last contributor about legal responsibilities, the contract you have As a seller is the same as a private seller or trade.

I'd start off with a view that you are a private guy trading up your car until you find it pays the bills. The revenue will not consider you to be a business until you have a few cars on the go at any one time.

As for sourcing, I used auctions and private sales. I was at the cheaper end of the market and went for auctions where main dealers disposed of honest looking trade ins. I also aimed at over priced private sales, these tended to be better cars where the seller thinks his car is worth more than it really is. I would take a look, offer a very low price in the basis that very few people would bother looking at the car at the advertised price. I'd then give the guy a call as the advert was needing to be renewed in the hope my offer was still the only one on the table. Also try main dealers, especially at reg change time. They get a lot of trade ins where they feel they cannot put them on the forecourt due to age / manufacturer etc.

 

[JohnJP]

Issues you perhaps need to think about.

Sounds like you are not in the motor trade already - so do some research, then do some more! - find out what sells and what doesn't - most people setting up as one man dealers have worked in trade, know the ropes, pitfalls etc.

Obvious things I can think of in no particular order:

1. Need a motor traders vehicle insurance policy & set of trade plates - probably 1K a year at least just for that. If don't have those you can't legally take a vehicle in 'as stock' without putting your name down as the registered keeper. That immediately devalues any stock and the paperwork with DVLA then is hell all the issues around continous vehicle licensing & insurance,

2. Trading from home with regular visitors to home address an issue (unless you are in the middle of nowhere) expect issues from council unless you get permissions (delays, neighbours will certainly object and if you live in a residential street then 'no chance').

3. Sourcing your stock - most of the independants out either buy at auction, have a network of trade contacts (larger dealers looking to offload the less desirable vehicle or those that don't fit in with the brand if they are main dealer etc.)

4. Trade contacts to fix the stock you take in (valet, service ...) or that has a problems once sold - a bit of body work here, an ignition sytem fixing there, the customer that bring something back next day with a cronic oil leak etc. etc.

5. Finance packages to support more expensive vehicles.

6. Obviosuly issues around keeping proper books, knowing the VAT trading threshold, when to start charging VAT and deciding whether to be sole trader ltd, company etc, or perhaps starting as sole trader and moving to Ltd once certain business level reached

Some guys start small pretend they are not in the trade & advertise as 'private individuals' and learn buy selling 1 or 2 vehicles every other month - perhaps that is where you wish start - you might get away with it for a while but don't bet on it. Have a proper plan to be a legit business with repeat customers.

JohnJp