Hi there,
After a lot of research I have decided to use my knowledge of cars and finance to make a partnership with my brother who is a mechanic. We plan to buy a car a month, make any repairs, clean it up and sell it on for a small profit.
Nothing too serious to start off with, just a bit of a hobby which we might take more serious as we go.
I was just wondering if somebody could explain the V5 section to me of trading as a partnership.
If I cuy a car off ebay for example what do I do with the V5?
Im guessing that I need to register the car using the V5 to our business name ? Surely I cant leave it un-owned until we sell it and give the V5 to the new buyer.
If it is the business name that we need register, what happens if you want to sell it inside a few days of buying it?
Also am i right in thinking I dont need a licence if im not offering any finance, mots, repairs etc. just some traders insurance to allow me to drive the cars I buy.
If somebody could provide some guidence that would be much appreciated.
Thanks
Andy
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First you need the uniform that all car dealers must have to impress their customers and instill confidence .
i.dailymail.co.uk/i/pix/2008/11/18/article-0-006EC...g
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LoL Ive already got my dodgy looking suit !
Ive picked up a few magazines the last few days but its more info about the actual cars to get and what to do with them.
Its the V5 and traders insurance that I cant find any info on.
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The Arthur Daley response probably isn't very helpful to you but this topic has been covered sooooo many times before, I suggest you try a Forum search. Be warned though, the answers are going to generally be of the 'don't bother' variety.
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Hi Chris,
Sorry to be a pain but could you provide a link ?
Ive done a search but couldnt find specific details on what to do with the V5 document. I read one post from a trader who says to register it as the trader business but don't understand the process in this.
Thanks
Andy
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Anybody ? Still have not had any luck searching.
Ive read you need to put the car in the trade name but how do i do this ?
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Sorry Middeo, I don't know the answer to your specific question. Why don't you ask DVLC?
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Car Mechanics magazine do a piece every month about selling cars from home. In previous issues they did a series about setting up the sort of thing you are. Perhaps you could buy the back issues.
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What do you know about your obligations under consumer protection legislation. Unless you can write six paragraphs about them, and are able to price your cars sufficiently to be able to pay for your obligations, don't bother.
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Hi mapmaker,
Basicly we have a supply of cheap cars with minor problems that are fixable by us.
We are only planning on doing about 1 car a month to start off with. More a hobby.
What would you suggest we do ? Keep it as money on the side and do it as a private seller ?
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>>What would you suggest we do ? Keep it as money on the side and do it as a private seller ?
In no way do I suggest you break dozens of laws.
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Good I didn't fancy that route !
I have found this on the internet :
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when selling a vehicle to a 'motor trader', the seller should fill in section 9 and send to dvla, then give the rest of the v5 to the trader
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Gonna check my v5 on my car tonight to see what this section is.
Like ive said we aren't doing this to make huge money. More of a hobby that I want to keep legal. So just want to know what to do with the v5.
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What mapmaker is saying is you need to understand your obligations. If you sell a car and it develops a problem in the first few months you will likely have to put it right at your expense.
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Yeah I understand this.
Gonna look into length of how long Im under this obligation tonight.
My business partner is a mechanic so we shouldn't cope to bad with people coming back.
Thanks for the tips guys !
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just some traders insurance to allow me to drive the cars I buy.
I suggest you look into this aspect further before you proceed - I suspect you will find it costlier and more difficult to obtain than you might think
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Hi CGNorwich !
I take it you do what im planning to do !
Ive already got traders insurance quote and have worked out my figures. Im an accountant so Im ok with the income/outgoings.
What do you do when you purchase a car from an individual ? Do you get them to fill in section 9, keep the v5 and pass the v5 onto the new buyer ?
Thanks in advance
Andy
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OK When you purchase a car, be it from an individual or a company you make sur that the Owners give you the V5C, they retail just the yellow slip with your company details on and they send off to the DVLA to inform them that the car is now in the trade.
When you sell a car you give the private purchaser the green slip filled out with their address details.
Make sure you give a proper receipt as it will also help you should the buy break any laws. Add such things as the Mileage when sold, what documents were suppiled, how many keys supplied and any road tax included etc.
Best of luck
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After a lot of research I have decided to use my knowledge of cars and finance to make a partnership with my brother who is a mechanic.
With the utmost respect, the fact that you're asking these questions implies that neither your research nor your knowledge of cars is adequate enough.
Edited by OldSock on 03/08/2009 at 14:11
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nice to see you want to do everything right Middeo
all the details are on the v5 by the way
sit down and read them is my advice (seriously) its all straight forward,this is why dvla charge 10 p per minute see
as for insurance consider fire and theft and insure your own car on a seperate policy,this way traders insurance can be very cheap
you will need trade plates to move untaxed cars or even so you dont have to put taxed cars on the insurance database every time you do a test drive etc
trade plates are £190 for the year and you get them via your local dvla office
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Downesi1 & bell boy , thankyou so much for the info !
Gonna get this all jotted down for my business startup plan. Great info. Will get a cash book as well to keep all figures accurate and recorded.
Ive been looking into trade plates as well, but i think i will get them when i buy a car with no tax. Going to avoid them at the moment if possible just to keep things simpler.
Ive also got a few quotes coming in 3rd party not including my personal car.
To OldSock - Thanks for the concern. I understand where your coming from. The knowledge we have of cars is mechanical and not business, hence the questions / research that im doing now ! But I will be looking into this more for the next month or so before we proceed. Thanks for your comments though
Again thankyou very much guys.
I will be sure to stick around.
Andy
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Delighted you know what you're doing. Would you like to explain to us exactly what you think your obligations under consumer protection legislation are?
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"Would you like to explain to us exactly what you think your obligations under consumer protection legislation are?"
If he knows this in full he'll be the first and only motor trader who does that I've come across!
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Just use the well known phrase that all main dealers have ready .
"It's a characteristic of the car sir, they all do that "
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Too many posters seem so keen to put obstacles in this guy's way, they are not responding to his query.
He wants - to start with - to do 'one car a month to see how we get on'.
Effectively, he's a private seller until such time as he starts holding stock.
Consumer legislation? - Caveat emptor and all that.
Can't price the cars correctly - so he might lose a few quid. So what? There's two of them to bear the losses and it is only money.
To the OP I say: Good luck to you, and let us know how you get on.
After all, you don't want to deprive the snipers of some more target practice, do you?
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>>Effectively, he's a private seller until such time as he starts holding stock.
I don't think that's true. The moment he sells a car with the intention of making a profit, he's a trader.
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>>Effectively, he's a private seller until such time as he starts holding stock.
Absolutely not. If he tries this he is likely to have the full weight of the following Governmental departments upon his back:
1. HMRC - the taxman seeking NI (OP don't forget this one)
2. Planning authorities
3. The police for driving uninsured cars
4. DVLA for having problems with his car tax discs
5. DVLA because he's only had the motor trade section of his V5 completed
6. Trading standards
7. HMRC for VAT (if he sells enough).
Actually, I absolutely agree with you. It is the moment he is holding stock that the problem arises. And what is the first car he acquires if not stock?
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If he tries this he is likely to have the full weight of the following Governmental departments upon his back: >>
Mapmaker: The OP said he was an accountant. So presumably he knows all that, even though "ifithelps" possibly may or not ?
Edited by jbif on 03/08/2009 at 18:41
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Effectively, he's a private seller until such time as he starts holding stock. >>
Fact? Really? or is that just your opinion?
It might help if you gave us some basis for that statement.
To the OP I say: Good luck to you, and let us know how you get on. >>
yes, by all means go ahead and sell your 12 cars in 12 months, ad then please do come back to tell us of your experience. That should be most helpful and useful.
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Dont want to start arguments !
LoL
Yes i am an accountant and will make sure everything is all set up correctly and legally. Any purchase with the intention of selling for a profit is a trader, so i must set up as a trader regardless of weather i sell 2 or 100 cars.
Thanks to those that wish me luck ! Like you have said it will be an experience. Good or bad it is just business at the end of the day and if all i lose is my initial startup then i really dont mind. At least I can say i gave it a shot and enjoyed it.
No offence Mapmaker but you seem to keep shouting about my obligations without actually providing any help ! As i have said we are a few months away from starting and we are just researching at the moment. I realize that being a trader comes with responsibilities so why dont you just tell me exactly what you want to tell me ?
A lot of people seem to deter people starting in this business for no exact reason.
Its up to me to get the figures right, all i wanted was some help regarding documentation !
Anyways thanks for the help
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No offence Mapmaker but you seem to keep shouting about my obligations without actually providing any help ! >>
I may be wrong, but I think Mapmaker is likely to help you if you show evidence of what you do know. If as you say you have done research, you should know what to quote to Mapmaker to prove that you do know your stuff, and then he should be able to fill in any gaps.
Hint: HJ's Faqs, as well as previous threads on this forum, are a good source of information on what consumer's rights are and what the official BERR trader's guide says.
Edited by jbif on 03/08/2009 at 21:21
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jbif/mapmaker
There are two people in this business, so at one car a month, each is buying and selling six cars a year.
At that level, no one is interested.
Not even MI5.
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At that level, no one is interested. >>
Says who? The supreme ayatollah? Fact or opinion?
p.s. If you ask Mapmaker nicely, he may tell where to look for the facts.
Edited by jbif on 03/08/2009 at 21:15
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jbif,
Confrontational as ever.
You know who says so, I do.
Oh, and common sense says so, too.
Ps: if you ask mapmaker nicely, he may tell you what that term means.
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You know who says so, I do. >>
No. I do not know on what authority you say so. And on what basis do we judge how your information can be relied upon? So far all I know is that this is your baseless opinion. In other words, it complies with
www.honestjohn.co.uk/forum/post/index.htm?f=4&t=33...5
Confrontational as ever. >>
I usually avoid responding to posts where Mr X and/or you are involved.
Edited by jbif on 03/08/2009 at 21:28
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"At that level, no-one is interested"
I have to say that I agree with this. I mean, is it not within a man's right to privately own 6 cars per year? People buy and sell cars all the time, it's just that these two chaps will be doing it a bit more frequently than most. It certainly doesn't mean they have to declare thamselves as traders.
Mike Brewer once did a TV series called 'Rags to Riches' where he tried to move up the automotive food chain by making a profit on each of the 6 or so cars he bought and sold. If he can do that, surely anyone can? Buy a piece of auction fodder, spruce it up and sell privately for a profit, what's the problem? I don't think that doing one-at-a-time, once-a-month would throw up any issues.
Regards, Hector
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Middeo says he wants to setup as a trader and has experience of trader accounts as he is an accountant. So he is not asking for advice on being a trader or not - he and his partner for this venture know they want to be traders, albeit starting small.
So can someone who knows the answers to his questions (or where to look) advise him?
He doesn't sound like he intends breaking the law, ripping people off etc. And with our help will know what liabilities he and his business partner may need to be aware of.
PS. Welcome to the back room Middeo!
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Hi middeo , you seem to have generated a lot of hot air and biased opinions rather than real information . Ive been a car trader for thirty years. let me try to help with some of the information you need.Can I say that car trading is a great way to make a living . However you will be working in a business that constantly changing and its very easy to get your fingures burnt.Firstly car insurance , you must have trade insurance preferably fully comp,usually the cost difference between comp and third party is not enough to justify the potential risk ,My policy is fully comp,with a £500 excess , it covers test drives by a potential buyer and costs £650 a year, For a small extra charge you can pay monthly.My annual policy is £650.the insurer is Motor trade solutions 08707 87 87 40.
When you buy a car have the owner sign the yellow part of theV5C/3.You should also sign it as a trader and fill in your name and address.The owner (not you)should post the yellow part to the Dvla.When you sell the car ,Give the new owner the green slip V5C/2 ,Fill in the rest of the v5 with the new owners details and you send that to the dvla.
You cant offer finance without a credit brokers license.
Trade plates are a must, the local Dvla office will supply them for the cost of the annual tax, £150 plus about £20 as a one off cost for the plates.You must confirm that you will use them in connection with the motor trade,Oddly you do not have to provide details of your car trade insurance to be given trade plates.Thier are lots of restrictions on trade plate use.However its very rare for the dvla to refuse to supply them.
Advertising, the only place that really works is Auto trader internet, the magazine is a fading force.
E bay , especially the auction side is usually a waste of money,its rare that the prices reached generate a profit,It can however be a usefull place to buy.
Selling , I use glasses guide when buying, however before buying always check autotrader for the likely selling price.Sometimes glasses trade price is a nonsense , you can buy cars cheaper on ebay than you can at traditional auctions.A subscription to glasses guide costs £400 a year,however you can buy last months guide on bay for about £20 a copy.The prices dont vary that much in a month.Always,Always, do an hpi check before buying.The cheapest full check is the rac website , If you buy the checks in threes they cost £20, £7 each , use them up as you need them.The also give a certificate which you can show your customer when you sell the car. A lot of information I know .if I can help with anything else ,drop me a line . regards tony.
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rtj70 many thanks for your sensible post ! Thats exactly what im here for.
Tony G - Much rep for that great post !!! Very informative and much appreciated.
Im going to get the application form for the trade plates. Got some traders insurance quotes in the process as well.
I noticed that ebay car sales seem dead in the waters so will stick with autotrader.
Also thanks for the heads up about glasses guides. Will definately hook up with a subscription for that.
Again many thanks for your answers !
Middeo
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Hi Middeo , glad you found the info usefull,A few replies to your original post have commented on legal resposibility with regard to a cars mileage and condition. You are more likely to have problems if you do not do appropriate checks first.
For mileage ,If you use the RAC hpi check and fill in the mileage thats shown on the car now,it can flag up a clocked car.Also if you go to the DVLA/VOSA site and click history.You can see previous MOT details for a car. I always do both these checks before buying. Although not infallable they would be a good defense against selling clocked cars. I never put the mileage on a sold car invoice and I always give the hpi / vosa history check to the buyer. Bear in mind that modern cars with digital speedometers are very easily clocked using a computer.However its a serious criminal(not civil) offense to knowingly offer a clocked car for sale.
For mechanical condition , always try to get the cars sorted before you sell them.Try to sell them with a new MOT.That can help you with a defense against selling an unroadworthy car.If a customer complains try to sort out his problem .However buyers often experience buyers remorse . The dark blue astra he bought is not so exciting the week after he bought it.!Consumer law requires you and your buyer to be reasonable.If he paid £2000 for a car it can,t be perfect . However a buyer is entitled to a car thats free from major mechanical defects.Generally the newer a car is and the higher the price paid the more a buyer is entitled to expect from it .In thirty years Ive never had to refund the purchase price of a car.However I do average £20 a car in additional work and good will after I sell a car. Most cars cost nothing One focus with a faulty gearbox cost me £400.
For warranties you may want to use warranties 2000 in leeds tel 01132 711180.They charge as little as £10 for a 3 month warranty.Obviously it doesnt cover much , but it does make your buyer feel as though hes dealing with a garage rather than a lad working from home.
Again good look with your venture.
regards tony
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tinyurl.com/b998y6 (Links to a You Tube clip of some music/song relating to Arthur Daley - "E's Alright" by the Firm)
Edited by rtj70 on 03/08/2009 at 22:28
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To mapmaker:
Ive got the following obligations so far :
*State in a disclaimer there is no guarentee on the mileage being correct.
*Traders have no legal obligation to tell purchasers about past repair work. If you ask the trader about these matters, he must answer truthfully or tell you if he doesn?t know.
*Fair wear and tear is not considered to be a fault.
*If a car is not fit for their purpose or misdescribed, the buyer has the right for a short time after purchase to reject the car and get a refund of the purchase price.
*If fault was present at purchase and buyer left it too late to get a refund repair or replacement may be seeked. If not possible a partial refund may be settled.
*Only a court can deem the lenght of a short period to get a full refund on a case by case judgement.
*Any sale is governed by Sale of Goods Act 1979.
*Cannot be taken away from buyer with phrases like "Sale of Goods Act 1979 "
*MOT doesnt mean car is roadworthy at date of sale. Must be sold as roadworthy.
*Internet sales also governed as above but added protection of Distance Selling Regulations.
Basically i wouldn't want to sell a non roadworthy car anyways so would be willing to repair the car or offer a refund full or partial.
I will make sure when i complete a sale to include the current mileage and any notes as advised earlier to further protect myself.
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if you make a note of mileage on invoice make sure unless you are 100% sure the mileage is correct that there is a disclaimer at the side that the customer can see ,as well as the speedo head sticker
remember that the last owner will tell any lies to get maximum money for their cars and it is therefore vital you dont take their word for it that the mileage is correct unless they are the only owner and signs for it
be very aware of this,dont deviate,basically its easier to disclaim most cars to cover yourself,once you explain the legal side to customers they understand,offer them the log book details to phone previous owners if they wish
as regarfds trade plates they are £190 for the year you will get a visit from the dvla so make sure you have your reasons clear,if you do and you have no convictions for fraud in relation to customs and excise then you will get the plates for a period not exceeding 6 months to see if you should be allowed them,ive never heard of the £20 admin fee but then again my trade plates are hewn out of slate
never offer a car for sale that isnt ready to go now ,its illegal and trading standards take a very dim view of it as well you can imagine rightly why
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remember that the last owner will tell any lies to get maximum money for their cars
'will' -> 'might'
In the same way that not all dealers are dishonest, neither are all owners :-)
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I wish you the best of fortune with your new venture, Middeo.
Some of your earlier comments did seem a bit confusing: using a 'business name' but doing it 'as a bit of a hobby' seemed somewhat at odds. I guess even Alan Sugar started somewhere, though :-)
You don't say whether you or your brother are currently employed or self-employed, or what family commitments you might have. Many an employer would object to an employee fielding calls from customers throughout the day :-( Family demands can also use up a surprising amount of 'free' time....
I have also thought about doing what you are proposing, but have, quite honestly, 'chickened out' due to fears of cash flow not meeting monthly outgoings. If you dwell too much on the negative it's quite easy to talk yourself out of anything :-(
Just one more thing - make sure that you and your brother agree exactly where you stand regarding the financial aspects. Many a friendship has ended - or family 'feud' started - when £££ becomes an issue. Everything looks enthusiastically rosy, initially, but economic conditions - and peoples' character - can change for the worse.
Plus - if you don't do it, you'll never know.....!
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I'm only banging on about customers' rights because the reason most small businesses fail is because they fail to plan for contingencies. If you've read HJ's FAQ, and realise that people will expect their cars to last for 6 months from purchase, and are prepared to deal with your financial obligations arising from this, and factor this into the price, then you should be fine.
www.honestjohn.co.uk/faq/faq.htm?id=43
The world is full of people who think "I can buy those, and sell them on eBay for x, and undercut Tescos/whoever, and still make a profit." But then when somebody asks for a refund uinder the DSRs, the entire business model explodes.
If it were that easy to buy cars for £100 scrap, and sell them for £1,000 having spent £75 on them, we'd all be doing it... To OP: good luck (according to the traders who post on here, you'll need it...).
ifithelps>>There are two people in this business, so at one car a month, each is buying and selling six cars a year. At that level, no one is interested.
Not true. There is in fact a partnership which is buying and selling 12 cars a year. And a poster on here has a client who was done by HMRC for trading a couple of cars a year.
To jbif, I have no doubt OP is reasonably aware of those Government bodies who will be after him. My post was directed to your helpful friend...
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Not true >>
I told ifithelps that you would tell him if he asked nicely!
To jbif, I have no doubt OP is reasonably aware of those Government bodies who will be after him. My post was directed to your helpful friend... >>
Mapmaker, I know, I was only using you. ;-)
A bit of Aunt Silly Sally shilly-shallying was involved as my helpful friend takes umbrage at my posts and has even officially complained via the mods. So in order to avoid getting further notes from the Mods, I generally bite my tongue and try to avoid responding, even when I know that some duff opinions are being touted as if they were facts set in tablets of stone.
Edited by jbif on 04/08/2009 at 11:07
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..was done by HMRC for trading a couple of cars a year....
The OP ought to be delighted if he gets 'done' by the taxman because it means he will have turned a profit.
Taxmen - in my experience in the real world - are quite reasonable if you are reasonable with them
The OP has already said he is keeping proper records, so he has nothing to fear if he gets a visit.
Sounds like he intends to contact them first, anyway.
By the way, Mapmaker, this post is directed at anyone who cares to read it - I'll leave the formation of little cliques to others.
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The OP is an accountant, so he ought to know how to ensure the business makes as much/little profit as suits him. Amazing how much some self-employed people pay their wives to answer the phone, type a few letters and pay in the odd cheque....
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I would echo most of the very good advice already posted. The most important things are:
- Trade insurance: this is a must. It is pretty much impossible without it.
- Trade plates are also pretty much a must.
- Somewhere to store the cars (untaxed) off the road which isn't going to annoy the neigbours.
- Keep proper records (I'm sure you know this). Even if you keep silent about what you are up to if HMR&C do ever check (unlikely frankly as they seem in complete disarray and aren't much interested) the fact that you have records and can prove what you do/don't owe will make it so much easier.
- Be careful of not going over the VAT threshold. This is more important than tax records.
As far as SoGA liabilities it really depends on what type of cars you are selling. If they are £1000-£1500 run arounds then your only real worry is that the engine or gearbox goes pop soon after sale. On more expensive cars your responsibilities will be proportionally greater. Used cars do not, however, need to be perfect unless very new and low mileage.
Never sell a car which you are unsure of the mileage on, never sell a car you know has a hidden fault (punt these through the trade/auctions.) or if you do tell the buyer and let them make their own mind up.
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great advice pd,you obviously know the car trade,amazing how far off the subject some of the contributors have got with this thread. regards tony g.
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Another essential is that you must ensure that each car you sell has foot mats in place as per: www.honestjohn.co.uk/forum/post/index.htm?t=17548 :o)
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