I decided to be a sole trader ( In IT) and a couple of clients but terminated them to update my skills set ( training). I then entered the cost of training as expenses into my personal self assessment and got some money from the HMRC ( as tax overpaid) because i was also i full time employee then.
HMRC are now saying since i never traded as a sole trader, i should not have claimed expenses,thus they want the money back.
Although, i carried out promotion and got minimal payment ( 20 pound) from client, i did not include this in the self assement form.
What are my options here, since i do not want to pay back the money???
1) How does HMRC define trade, must it always generate income. I checked and the badges of trade goes behond income, also include motive.
2) Can i redo my self assessment and include the minimal 20pounds?
Be careful what you say; I terminated them to update my skills implies the trade had ceased before you commenced the training.
The Revenue may argue there was no profit motive and that you only did the promotion work to set off the training costs and create a loss.
That being the case, you might think about taking it on the chin and dropping a major hint that you have no intention of claiming the loss this year. They might take the bait to close the case and you will have succeeded in claiming the costs.
