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Exactoscale Track Components


mike knowles
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I’d expect a society to make a mark up on stock they’ve purchased on behalf of the members

 

The society can't do anything "on behalf" of the members because it is the members. It's not a separate entity (unless incorporated as a limited company, which is not the case for the Scalefour Society).

 

Martin.

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As Martin says - you can't make a profit from yourself and therefore as regards tax it is not a taxable profit. Profit from non-members is a taxable profit.

 

As you've said "As Martin Says" I'm guessing you don't actually have a professional answer.........Good luck getting that past HMRC.

 

As far as the taxman is concerned if item X costs £1 and is sold for £1.50 then there is a profit there. There are expenses that can reduce the profit, but if it's sold for more than it costs it's a profit. 

Edited by chris p bacon
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As you've said "As Martin Says" I'm guessing you don't actually have a professional answer.........Good luck getting that past HMRC.

 

As far as the taxman is concerned if item X costs £1 and is sold for £1.50 then there is a profit there. There are expenses that can reduce the profit, but if it's sold for more than it costs it's a profit. 

 

That reminds me my self-assessment form is due in next month...  :O

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As far as the taxman is concerned if item X costs £1 and is sold for £1.50 then there is a profit there.

 

But it's not "sold". It already belongs to the members. If you buy X for a £1 you can't sell it to yourself for £1.50. The members own the assets of the society including the trade stocks, which were purchased with their money.

 

Martin.

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But it's not "sold". It already belongs to the members. If you buy X for a £1 you can't sell it to yourself for £1.50. The members own the assets of the society including the trade stocks, which were purchased with their money.

 

Martin.

 

 

I understand what you're saying, but having seen a small (non railway) society come under the scrutiny of HMRC for sales of items to members and pay a substantial fine/arrears, I don't think it's as simple as you think it is.

Edited by chris p bacon
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The society can't do anything "on behalf" of the members because it is the members. It's not a separate entity (unless incorporated as a limited company, which is not the case for the Scalefour Society).

 

Martin.

The EM Gauge society is a limited company though, which is one of the society’s involved as I understand it. So are they not able to sell to their members as I suggested?

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As Martin says - you can't make a profit from yourself and therefore as regards tax it is not a taxable profit. Profit from non-members is a taxable profit.

Sorry utter balderdash

 

If you as a person buy something and sell it, and make a profit , you can be liable to tax. End of story , the issue is the definition of a trade , and one of the things is whether it is “ habitual “ and in the normal course of business

 

Other then optics , and internal policy , there is no reason from an insurance or tax position for a society to sell to the public or not.

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The EM Gauge society is a limited company though, which is one of the society’s involved as I understand it. So are they not able to sell to their members as I suggested?

I do believe the point is , in offering these products through the relevant societies shops , is it leverages an existing and in most cases well organized distribution system , almost exclusively aimed at mail order.

 

I also understand that exactoscale plan to make available at slightly higher cost the components directly

 

Surely this is the best of both worlds and shows up the key mistakes C&L have made when they acquired the business recently from the old C&L

 

Dave

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But it's not "sold". It already belongs to the members. If you buy X for a £1 you can't sell it to yourself for £1.50. The members own the assets of the society including the trade stocks, which were purchased with their money.

 

Martin.

This is not the case Martin , you are not buying from yourself , tax law has provision for unincorporated entities and differentiates ownership from trading , in the case of the EM society , which I believe is incorporated , the rules are very clear and there is absolutely no difference between members sales and public sales

 

For example I may own 100 % of a company , it’s still pays tax on notional profits of sales to me, even if I fully privately capitalized that company

Edited by Junctionmad
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If you as a person buy something and sell it, and make a profit , you can be liable to tax. End of story.

 

Agreed. But the operative word is "sell". In this case the product is not "sold" to members, because they already own it. It was purchased from the original supplier using the members money. Obtaining it from the elected trade officer and making a contribution to the funds in return is simply the internal arrangements of the society. They could just as easily distribute items to the members for free, and put up the subscriptions to cover it. It would make an interesting motion at the AGM. And then where would your argument about profits be?

 

To see the sense of this, you have only to suppose that the society has 2 members instead of 2000.

 

p.s. I'm not talking about incorporated companies, which have a separate legal entity.

 

Martin.

Edited by martin_wynne
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Agreed. But the operative word is "sell". In this case the product is not "sold" to members, because they already own it. It was purchased from the original supplier using the members money. Obtaining it from the elected trade officer and making a contribution to the funds in return is simply the internal arrangements of the society. They could just as easily distribute items to the members for free, and put up the subscriptions to cover it. It would make an interesting motion at the AGM. And then where would your argument about profits be?

 

To see the sense of this, you have only to suppose that the society has 2 members instead of 2000.

 

p.s. I'm not talking about incorporated companies, which have a separate legal entity.

 

Martin.

What you refer to is known as “ mutual trading “ to members and is by and large free from corporation tax , whereas trading to third parties for profit attracts corporation tax

 

My point however is that nothing in a societies insurance or otherwise prevents it from trading with the public, and should it make a profit , after deducting it’s expenses , it should quite legimately pay the relevant corporation tax. But it is quite wrong to say ( and you may not have said it ) that trading with members prevents trading with the public. The main reason societies by and large trade with members only is to be seen to offer benefits to members not attainable by non members. That’s entirely strategic and legitimate , the tax question is moot

 

Dave

Edited by Junctionmad
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It also strikes me that the societies already have their mechanisms for sales sorted out. Presumably Exactoscale will still have to create/buy-in a system for their website which will be an added cost for selling themselves rather than through the societies - maybe the extra 10% is intended to cover such overheads.

 

 

It certainly is ..............and the cost of the one persons wages who is NOT an Exactoscale volunteer, who has to to pack the mail orders and toddle off to the post office! etc

 

See you all at Scaleforum I hope!!

 

Tony Sullivan

 

MNW1919

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Nothing wrong asking for the best price, they do it all the time on bargain hunt 

When I worked for a large mail order chandler at the annual London Boat Show, we were often asked for or best price. I always added 10%. When the enquirer queried this and said they were expecting  lower price, I said that might be best for him, but not for us.

 

Personally I think asking asking any of our Small Suppliers for a discount is a no no . They still have to pay rent, rates, overheads, production costs, etc. and the discount comes out of the "profit" they make,  so you are in effect asking for them to give you some of their wage.

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When I worked for a large mail order chandler at the annual London Boat Show, we were often asked for or best price. I always added 10%. When the enquirer queried this and said they were expecting  lower price, I said that might be best for him, but not for us.

 

Personally I think asking asking any of our Small Suppliers for a discount is a no no . They still have to pay rent, rates, overheads, production costs, etc. and the discount comes out of the "profit" they make,  so you are in effect asking for them to give you some of their wage.

Jol

 

Chris and myself were jesting, knowing the finances of small traders I am more than happy to pay full price. Most do actually discount larger packs of parts where they can. Not forgetting the amount of free advice given buy them

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Personally I think asking asking any of our Small Suppliers for a discount is a no no. 

 

Damn, and I was hoping you'd do me a couple of LRM locos for a tenner :)

 

Seriously, there are some things I am interested in - for a proper price of course.

 

BTW - I hope John is firing on all cylinders again now. 

Edited by sharris
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Damn, and I was hoping you'd do me a couple of LRM locos for a tenner :)

 

Seriously, there are some things I am interested in - for a proper price of course.

 

BTW - I hope John is firing on all cylinders again now. 

Steve,

 

John is now recovered from his surgery, etc. and has just about got things back on track, dealing with outstanding orders, packing kits for the shows, etc.

 

It's totally John Redrup's business so I am not involved in the financial side of it - other than the free assistance and support I provide. But I'll happily do you a special receipt at a show for a tenner to show to the Domestic Authorities, something we were often asked to do when cash was more common for purchases than Credit Cards.

 

When helping at shows, I have only once been asked for a discount on a kit. The customer said he expected a discount as he had been given one when he had bought a couple of Jidenco kits (which must have been a long time ago). As we weren't that desperate I declined but he sent his wife back later to ask again on his behalf.

 

Jol

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