buying product from your own company question

This may seem like a silly question.

At the end of the year, if I have stock that I haven't sold that is not suitable for sale next year (such as photo calendars) I would like to use them to send to friends and family as gifts. I know I have to buy them back from my business, but at what rate - cost, wholesale or retail price? I hope someone can help.

Thanks

Jan

It's your business, so it's your decision. You do need to account for them, as you say, so you clearly can't go less than cost, unless you have already written down the inventory value, but then you're carrying the depreciation cost in any case as a balance sheet item.

If you're a one-man-band, there isn't much point in buying the items at wholesale prices, as you are only creating a 'profit' that you will potentially end up taking back out of the business in any case.

Buy them at cost, and make sure you invoice yourself properly like any other punter. You'll have to take the hit on VAT, if you charge it.

Thank you David for the advice. That makes sense. I had been doing it at cost and wondered if I had been doing something wrong.

Hi Jan, sounds like good advice from David. Can i suggest that you get a picture on your profile asap?

You have had 40 views and one reply (plus mine) - people do business with people.

Anyway, if you are ever Cheshire way give me a call.

Hi Jan

If you buy goods or services from your own business the Revenue expect you to pay market value for them. The trick is to come up with a sensible/realistic market value. For instance a calendar that has six months to run is probably worthless, a calendar for next year is probably worth full retail today. Come up with a price based on a reasonable argument and the Revenue should be happy. The test is if I offered to buy the stock at the price you intend to sell it to yourself for, would you let me have it? If the answers yes it stands scrutiny. From this you will gather that the market value could be less than cost.

Of course with all of this someone has to ask the question first. e.g. your accountant, HMRC

Hi Jan,

I would just write an IOU, lol

Whether you think you right, or think you wrong, both ways you right.

All Success!

There you go Peter. A self portrait of moi. I will be expecting a big order now from you of my photographs from www.asIseeitphotograhs.com.

Jan

After much reading, I found this on the HMRC website today as I was doing my self assessment which answers my question and is as Anthony advised.

Box 26 Goods or services for your own use

If you, or your family or friends, take any stock or manufactured goods

out of your business, you must include here the value (and not the cost to

you) of what was taken out, unless you have already included such value in

your turnover.

Jan