I'm currently involved in a discussion with a colleague of mine over a situation regarding side business income - hoping someone can clarify. It's loosely based on a situation with a mutual friend of ours.
If an employed person(employment is only income) was to set up something in their spare time(for example a website selling information on a subscription basis), at what point does the website income become taxable?
A bit more info: So far, within 2016/17 one initial payment has been received by a customer. The service is subscription based, and the payment covers one year of service in advance. Therefore, the friend is expecting a renewal payment in one years time.
We're both in agreement that the income needs to be declared to HMRC as Self Employed income when this becomes "regular" however what constitutes regular?
I personally believe that the intent is there to continue to provide the service on an ongoing basis, and therefore the intention is for regular income to arise, and therefore the payment taken in 2016/17 will need to be declared in that year.
My colleague believes that so far it's a sporadic income, therefore not regular, and this will only become regularly after a second payment has been received - at which point all previous income should be declared.
Could anyone shed any light on this, maybe confirm who's correct/incorrect and why?
You have stated it is a business. My view - just because he is crap at it and only got one customer doesnt mean he can avoid registering as self employed.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
