New Motor Tradered Info, please - cookie
I am seriously thinking of starting up as a proper motor trader! I have been buying and selling cars privately for a few months now, and making a few quid at it. I need to 'do it right' now, as a local auction house, only deals with buyers with a VAT number. Becoming VAT registered is not a problem and I have quotes for Trade Insurance, but if I declare my self as a trader:

1 Do I need to offer any kind of warranty with the car?
2 What if the car dies the day after I sell it! Selling privately, the cars have been Sold as Seen so I have never really concerned myself with what happens to it when it is sold. But as a trader, I can see this would be different?

I have a guy that will service the vehicles, I can do the HPI checking and I was considering providing an RAC inspection on the cars I sell. (For buyer piece of mind)
It is really important to me that I do this right as hopefully I can turn this into my full time job.
I would like to hear from anyone that is already doing this, as there is probably a load more questions I should be asking!

Any advice you could give me on this subject would be great.

Andy Cooke
New Motor Tradered Info, please - Jonathan {p}
Plenty of people who can help here.

In UK law you have to provide a 3 month warranty with every car.

You could either decide to take any claims on the chin, or buy a policy for each car you sell and add that onto the costs.

Good Luck

New Motor Tradered Info, please - Altea Ego
Is this going to be run from home? If so you will need to check with your mortagage lender who may wish to charge you a commercial rate, and the local council who may take exception to the change of domicile use. Yes you could probably get away with both for quite some time, possibly for ever, but it only takes one disgruntled punter who thinks he has bought a lemon to wreak revenge.....................
New Motor Tradered Info, please - blank

No wisdom from me personally but this question has been asked and answered here before. That is not to say that some further useful opinions will not be aired, but a search of the site should give some interesting views, HJ's among them.

New Motor Tradered Info, please - Rojer
Having observed and partaken in small businesses myself, I would have thought it far, far, far simpler and more rewarding NOT to beome a 'proper motor trader' unless you wish for it to become your main source of income.

No warranties, VAT, accounts, staff, rent, light etc amounts to a lot less hassle too.

Not sure how Capital Gains Tax works on buying and selling private cars all day .. ? The tax man wouldn't really know what you bought and sold the cars for is they were bought and sold privately all-round.

I knew of someone who bought and sold (only) Mercs privately and it was enough to keep him in pocket money ... but he never wanted for trade status as he bought and sold only a handful a year.
New Motor Tradered Info, please - Thommo
No CGT on cars in any case as they are chatells.

When a trader buys and sells cars then they are part of his trading stock and he pays tax on his net profit after expenses so arising.

A guy selling a handful (5) of cars a year is tradng and should be declaring tax to Inland Revenue, just because they have not got him yet does not mean they won't...

How do IR catch people? other people grass them up (80% of IR information comes this way. So the more people you tell the more likely it is you will get caught.

I grassed up a 'home' trader because he sold me a clocked car and would not take it back when I found out. Cost him more in the long run.
New Motor Tradered Info, please - DavidHM
Like it or not, if you are buying cars at auction and selling them on at a profit, you are already a trader. I'm guessing that your V5 Telling a disgruntled punter to go away because cars are sold as seen is the fastest way to get Trading Standards on to you. You've obviously been lucky so far.

You don't have to offer any kind of warranty package (insurance backed, etc.) but the car must meet all the usual SOGA criteria. If anything goes wrong, you are expected to have the skill and knowledge to spot the problem in advance and sort it out. If you can't do that, tough - you still have to price it in to your profit margin. You may find that you want to offer a limited warranty so that you have predictability - if you are only selling, say, three cars a month at an average of £500 net profit each, two V6 engine failures and you're better off working in McDonald's.

CGT is not an issue but income tax is. The purchase of the car is an income expense; the profit is income. Make a loss and this can be offset against income tax. The VAT threshhold is ~£55000 - that is turnover, not profit. To make a living, you'd have to be turning over more than that unless you can turn £50 bangers into £800 ones.

Your mortgage lender may or may not be particularly interested but there may be terms that stipulate interest rate changes, penalties, etc. The deeds of your home may also give neighbours the right to object and get an injunction stopping you working from there. Finally, the local council will have the right to charge business rates and there is potentially a planning issue for a change of use.
New Motor Tradered Info, please - king arthur
Bit of advice from someone who is doing similar:

Is the auction house one of the biggies, like BCA? In my experience, as long as you show some proof of trade status such as motor trade insurance policy, they'll accept you as a trader and give you trade rates. Of course, to get a proper account with them you need to be in business for two years, VAT registered, buying several cars a week, etc, but TBH you can do perfectly well without an account to start with.

You don't have to offer any explicit warranty, not even three months as someone else advised - what you do have to do is be aware of the Trade Descriptions Act and the Sale of Goods Act. These are a customer's statutory rights and you are not allowed to put any restriction on them whatsoever (so saying that a car is "sold as seen", or "with no warranty implied or given" is completely illegal). It means that if the car turns out to be not fit for the purpose it can reasonably be expected to do, for a reasonable length of time after sale, you must either fix it or offer a refund. Obviously this all depends on the age and price of the car. You also are not allowed to describe the mileage of the car unless you have checked that it is correct.

The best thing you can do with each car is have it MoT'd before selling it, even if it's already got plenty of ticket. This means it must pretty much be roadworthy at point of sale and also reassures buyers (it is illegal to sell an unroadworthy car unless it's for spares).

Any other questions, fire away - I can't say I'll be able to answer them all as I'm still learning myself (be prepared to do a lot of that!)
New Motor Tradered Info, please - Galaxy
Car Mechanics magazine, published by Kelsey Publishing Ltd, have produced many articles on this subject, written by editor Peter Simpson, who appears to be well versed in trading vehicles.

Also, with my last copy that arrived in the post, there was enclosed another magazine, I think it was called "Trader" which I presume Kelsey intend to publish on a regular basis.

New Motor Tradered Info, please - cookie
Hello Guys,
Thanks to all of you that replied. You advice is brilliant.

I think I need just to clarify a few points. Some one said that I have been lucky so far about not being seen buy trading standards. I should have made it clearer at the start. It all started with a car a brought privately a while ago. I had no intension of selling it. I was using it everyday, until someone offered £300 more than I paid for it! They saw it in the staff car park and wanted it. I reluctantly sold it. The last car I brought cost me several £K. But, with the money from the previous car I sold, I only had to add £45. Without going into too much detail, the car I drive is now worth a lot more than the value of the first on I sold, and it’s only cost me a few hundred quid.

So yes, I have been lucky with the cars, but as far as trading standards goes, I don’t really see what their problem would be as I have used each car daily for a few months.

It concerns me that Jonathan is saying In UK law you have to provide a 3-month warranty with every car, and King Arthur and DavidHM are saying you don’t! Who is right!

Also, I am going to do this from home. The council are aware, the neighbours have been consulted, and the Mortgage lenders are happy. Thanks for that Renault Family.

I am sorted with the income TAX side of things. I have an accountant that is going to sort that out.

I don’t know what the profit margins are for all you guys out there in cyber space, but around here (Leicestershire), dealers are sticking a HUGE mark-up on the cars they sell, and basically I want a slice of the action!

On another point, Trade Plates. I know there are loads or posts about this on the site, but I am still a little unclear. Do I need to apply for trade plates before I start? Do I need to have shifted a certain number of cars before applying?

New Motor Tradered Info, please - Vansboy
The specific trade insurance, you mention, is a MUST HAVE!If you\'ve only a domestic policy, you are driving without cover.
Also your home insurance, will possibly, be in-valid, if you haven\'t told them of any business use.
Even if you work on the cars, elsewere, you may have visitors to your house, for test drives, viewings & complaints!The insurers need to be aware, of this.
Come backs need to be addressed, a warranty can be purchased, if you don\'t want to cover it yourself.You\'ll obviously want to sort things for your customers, anyway.
Get VAT registered, it can SAVE you money, as well as cost you.
Tell tax office what you\'re doing now, pay the tax you will owe, on the profits you\'ve already made.
Most important...KEEP PROPER RECORDS, what you\'ve bought,who you\'ve sold it too, when they bought it....

Good Luck, you\'ll need it!

New Motor Tradered Info, please - Gen
What you really need is a copy of Home Trader which came free with Car Mechanics magazine a month or so ago. You can get one free from this site:

Hover over 'About You' and click on 'Starting in Business'. This page will give you how to get that magazine supplement and a couple of articles from the magazine.

New Motor Tradered Info, please - Steve G
The warranty situation has just chenged with a new European law.
Its now the resposibility of the seller (trader/dealer) to fix any faults up to 6 months after the sale. Its up to the trader to prove the faults were not there at the time of sale (previously it was the buyer).
So if you sell a 10 year old hot hatch and the buyer does a few track days in it he can come back to you when the engine has failed and its to you to prove your not at fault for the engine failure. Crazy .......
Best bet is to buy warranties from companies like car care plan which should help you aviod any potential hassle.You will have to meet there terms i.e ages,vehicle types,mileage e.t.c
My only advice is to continue on a part-time basis then when you have trading records you can raise the finance to do it properly.
Good luck

New Motor Tradered Info, please - Martin Wall
If you are planning to trade from home all I can say is don't - unless you live in an industrial estate!

Why? Because you are being unfair to your neighbours. Where will your prospective purchasers park? Will they be driving in the neighbourhood taking test drives?

If you want to run a business do it properly from proper business premises and not your house.


Value my car