VAT accounting on commercial vehicles

[Ian@1904]

I need some VAT accounting advice.
Situation is a VAT registered motor trader has bought a commercial vehicle paid cash £10,000, from a private individual, no VAT charged. Vehicle is about to be sold for £11,000 to a non-VAT registered trader.

Does the vehicle have to be charged on a plus VAT basis?

What if any output VAT has to be declared?
7/47 of the gross amount £11000, which would lead to a loss on the sale
7/47 of £1000 being the profit element
Zero

[Finless]

I would say yes but, for the definitive answer, phone the VAT helpline -

0845 010 9000

Oh, and I think the VAT is due on the full value (not the PM) - it is unlikely that the IR would let someone off paying as much VAT as poss.

[Howard Payne]

From memory - if it's fallen out of VAT qualifying status (ie passed through someone who's not VAT registered - the previous owner) then it no longer incurs VAT when sold on again. I'd double check tho' - don't do many commercial vehicles. HTH

[chrisch]

If you are VAT registered you charge VAT on items and claim it back on sales. Vehicles are no different AFAIK. So item is 11K + VAT. If sold at 11K you have paid the guy's VAT.

Chris

[mala]

how can a car trader be non vat registered.

there is a turnover threshold.

what does he sell- 3 trabants a year.

[mala]

Originally Posted by chrisch

If you are VAT registered you charge VAT on items and claim it back on sales. Vehicles are no different AFAIK. So item is 11K + VAT. If sold at 11K you have paid the guy's VAT.

Chris

charge vat on sales and claim it back against purchases.

[ardhill]

Surely it doesn't matter if you are VAT registered or not, VAT is still paid.

If I go into my local shop and buy a chocolate bar, I pay VAT on it. If that shop is VAT registered, then they pay that VAT to the government and claim back the tax they paid on it. If they are not registered then they don't claim back anything, nor make VAT payments as such, so only pay the VAT at point of purchase.

But, the fact remains that I am an individual, a small company, or a multi national, still pay VAT on that chocolate bar.

But hey, I am thick at this sort of stuff, so don't listen to me No, honestly I am thick at this stuff.

[chrisch]

Originally Posted by ardhill

Surely it doesn't matter if you are VAT registered or not, VAT is still paid.

If I go into my local shop and buy a chocolate bar, I pay VAT on it. If that shop is VAT registered, then they pay that VAT to the government and claim back the tax they paid on it. If they are not registered then they don't claim back anything, nor make VAT payments as such, so only pay the VAT at point of purchase.

But, the fact remains that I am an individual, a small company, or a multi national, still pay VAT on that chocolate bar.

But hey, I am thick at this sort of stuff, so don't listen to me No, honestly I am thick at this stuff.

Its the amount you pay that changes. If you are a reseller of VAT items (foodstuff are not VAT so I think chocs are OK, but its not my area ) then you pay your supplier VAT on the wholesale price. If you resell that item to the end user you cannot charge VAT as you are not authorised to collect it. If you are VAT registered you must charge VAT to whoever buys it, irrespective of their VAT status.

VAT registration is mandatory at a certain turnover point (about 45K IIRC)

So you are correct some VAT has been paid, either by you or by the reseller. But not the same amount. Likewise the end price would change.

Chris

[MCFastybloke]

if the trader is registerd for vat and he bought the van from a non vat man,and want the transaction to be on the books he MUST charge vat reguardless of the purchasers vat status.The ONLY way he can sell without vat is by way of CASH i.e.not through the books

[scooby]

VAT is payable on the profit in the vehicle

i.e vehicle bought for £10000.00


sold for £11000.00


profit £1000.00

VAT payable to c&e £175.00

this is due to the second hand vat scheme, i use this all of the time and have never had any problems this was checked out by my accountant who has just reclaimed a good amount of VAT when doing my end of year calculations.

Scooby