Ding Dong, Taxman Calling

Companies use different terms for the people who sell their products and you may be an ‘agent’, a ‘consultant’, a ‘representative’ or a ‘distributor’ for the company which you represent. But if you sell products to customers door to door or in their homes then you may be caught by the Direct Selling campaign.

Selling can involve demonstrating a product in a customer’s home, sometimes at a party, door to door, using catalogues or you might just sell to friends or relatives. As a direct seller, you will usually take commission on the sales you make. You may be involved in direct selling as a full time business, to top up your income from another job, or to fit in with your caring commitments and responsibilities, but the commission that you take is a taxable source of income and as such it will need to be declared to HM Revenue and Customs (HMRC).

As a direct seller you are generally considered to be self-employed. This means that you are responsible for telling HMRC about what you earn and calculating and paying your own tax. Not everyone in the direct selling industry is self-employed. If you are a direct seller and you are unsure, you could start by checking any contracts, agreements or information sent to you by the company whose products you sell.

You can usually work out if you are self-employed by asking yourself a few simple questions. If you are a direct seller and you can answer ‘yes’ to all of the following questions, you are probably self-employed:

– Do you have responsibility for your business?
– Can you decide how and when you do your work?
– Are you paid on a commission only basis?
– Do you risk your own money in setting up and running your business?
– Do you receive no holiday or sick pay from the company you represent?
– Can you hire other people to help you or do the work for you?
– When you are self-employed you are responsible for telling HMRC about your income and paying tax and National Insurance yourself?

You can be employed and self-employed at the same time, for example working for an employer during the day and working for yourself in the evenings or at weekends.

If you, a member of your family or someone you know may be involved with direct selling, please speak to a member of the team who will review the circumstances and advise on the next step. You can contact us on 0845 177 5007, by email at [email protected], or by using the contact form on the website.