Applying for trade license/plates - pitfalls?

Honest John Back Room » Motoring discussion
View Threaded
Wed 26 Jan 2011 19:44
Applying for trade license/plates - pitfalls? - John.G
Hi, I'm a full time sales executive for a main dealer, but do part time sole trading in my spare time to boost earnings. I trade around 20 cars a year. It gets annoying having to tax the vehicles to use them, when I could simply have trade plates, but looking at the application form I'm wondering whether to apply or not. I already have trade car insurance, which suits me ideally.

What kind of checks do DVLA carry out?? They mention inspecting business premises etc. Would they check my finances/accounts/records etc?? I just work from home and advertise on the internet.

Any advice will be greatly appreciated! :)
Reply | Report as offensive | Link
Wed 26 Jan 2011 20:54
Applying for trade license/plates - pitfalls? - tony g

hi john.

i began trading from home about 4 years ago and applied for trade plates at the same time.

its an easy process to apply,simply state on the application form that youre selling cars from home.your home is therefore your place of work. you then pay 165 annual road tax plus a small fee for the actual plates about 20 pounds

the dvla are not interested in your tax affairs, however also remember that you possibly have a vat liability if your turnover exceeds the turnover threshold,of approx 70 k.the vat man will want about 17% of your profits.

thier are restrictions on the use of trade plates ,they must only be used in connection with your work as a motor trader,you could lose the right to your plates if you get caught using them for your personal use,although i suspect most car traders do use them privately

also you cannot park your car on the highway displaying trade plates for example overnight. again your liable to the loss of your plates and a fine.

finally one oddidty , you dont have to produce a valid trade/ private insurance certificate to obtain trade plates and the tax triangle that goes with them.not sure what the dvla,s thinking is on that.

good look with your venture ,it can be a profitable side line

regards

tony g

Reply | Report as offensive | Link
Wed 26 Jan 2011 21:09
Applying for trade license/plates - pitfalls? - John.G

Thanks for the info Tony!

Will the DVLA have any way of finding out i've gone over that threshold? Does applying for trade license/plates increase the chances of it??

Reply | Report as offensive | Link
Wed 26 Jan 2011 21:52
Applying for trade license/plates - pitfalls? - pd
IIRC you normally get issued them for a probation peroid. After that, you have to show invoices, receipts etc. to prove you are trading and need them. After that, you just get sent a renewal every year.

If you are regsitering cars as trade status then the DVLA to eventually pick up on it (there is a space for the VAT number on the yellow slip) if there are loads going through your name - this is seperate from trade plates. At some point, if 20 cars are going through your name, HMRC will probably pick up that you are trading and cross reference to check you are declaring it and registering for VAT if necessary.

They might not notice for 20 years but if/when they do they'll slap an assesement on you for 20 years unpaid tax & VAT so think carefully about whether to it fully legit in the first place.
Reply | Report as offensive | Link
Wed 26 Jan 2011 21:55
Applying for trade license/plates - pitfalls? - pd
The VAT limit is around £60k a year. If you're doing 20 cars that's an average of £3k each. If you're doing cheaper ones then relax and don't worry about it, if you are over the limit than seriously consider regsitering.

I'll happily string the income tax people out for years, argue for weeks about allowances etc. and generally take the michael as much as possible but don't mess with the VAT Man.
Reply | Report as offensive | Link
Wed 26 Jan 2011 21:56
Applying for trade license/plates - pitfalls? - John.G

I'm a part time sole trader from home. So for my purchases it would be internet auction invoices. And for my sales it would be home made computer sales reciepts.

Most of my cars come with V5s anyway, so I don't register them in my name.

Reply | Report as offensive | Link
Thu 27 Jan 2011 20:48
Applying for trade license/plates - pitfalls? - tony g

hi john,

sorry i caused you some confusion ,the dvla and the tax/vat man are not connected,

the dvla have no interest in the total value of what you sell . the dvla are interested in vehicle licensing issues ,plus driving licenses.

I suppose its just possible that the tax / vat authority , could request information on vehicles that have been registered to you from the dvla .if they thought you were involved in major tax avoidance issues. However with 20 sales a year it seems unlikely that you would come to thier attention.

going back to actually applying for trade plates ,its an absolute must that you have them.compare the cost of 165 a year with the fine you will get if you get caught driving without tax ,also how much a year do you spend on taxing just half of the 20 cars a year you buy .thats probably a thousand a year.

In my experience the dvla will happily issue you with trade plates if you are prepared to sign a decleration you are using them for trade use. another commentator mentions a provisional period when the dvla issues trade plates to you.ive never been contacted by the dvla in the 4 years ive had the plates .

i beleive you can download an application form to apply for trade plates from the direct gov site. that will give you an idea of the questions they ask.

finally hpi check all the cars you buy or take in part exchange .

if you buy a written of car or a stolen car or a car with finance outstanding you could lose an awful lot of money.

the cheapest complete hpi check ive found is autocheck , they check against all registers including finance for 5 pounds if you buy your checks 5 at a time .ie 25 pounds in total.

again good look with your enterprise.

tony g

Reply | Report as offensive | Link

We give you the low down on how to save on insurance, little-known tricks and tips, what insurance groups mean and how to use insurance aggregators to beat insurers.

Insurance group finder and how to save on insurance

Looking for a garage you can trust? Honest John's Good Garage Guide has thousands of reader recommended garages, plus how-to guides and tips on servicing.

The Good Garage Guide