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Team Starburst
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5,275 Posts
Discussion Starter · #1 ·
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
 

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Finless: You couldn't invent him...
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23,946 Posts
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.
 

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Guru
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7,112 Posts
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
 

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PADI Internet Specialty Diver
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10,679 Posts
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
 

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The worlds slowest sailor.
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2,970 Posts
how can a car trader be non vat registered.

there is a turnover threshold.

what does he sell- 3 trabants a year.
 

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The worlds slowest sailor.
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2,970 Posts
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.
 

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Irish Cave Diver in the making
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3,241 Posts
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.
 

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PADI Internet Specialty Diver
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10,679 Posts
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 :D) 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
 

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Go Big or Go Home
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1,865 Posts
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
 

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Registered
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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
 

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Guru
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7,112 Posts
In general there is no VAT on used vehicles. The dealer pays "Margin VAT" on the profit he makes when he sells the vehicle. The only exceptions to this rule are commercial vehicles and hire vehicles which are eligible for VAT on the sale price and as such are the only used vehicles that attract VAT for the purchaser to pay and reclaim. The situation here is whether now the vehicle has been bought and sold "through" someone who hasn't paid and reclaimed the VAT - whether it is still eligible. I'm 90% sure it isn't and it should now be sold VAT exempt. HTH
 
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Diver & Joshua's Daddy.
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Although not an accountant, I do run a vat registered bussiness. I am about to sell my current van once my new one arrives. My understanding is that because my bussiness is vat registered I have to charge vat on the sale of the van, as it is on the bussiness's books.
when I get my new van i will have to pay vat on it which i will claim back, my existing van will be advertised for sale at a price which will include the vat, i will issue a vat invoice that way if the purchaser is vat registered they can claim the vat element back.
Like I said not an account, but thats my understanding of the vat system.
 

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Go Big or Go Home
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As a Vat registered individual if i buy a van from a non vat man he cant charge it (reguardless of weather he paid it when he bought it).If i then sell it i must charge vat as i am registerd and reguardless of the purchasers vat status.This my understanding and is how i have applied it to my commercial vehicle purchases for the last 20 years i hope to god ive got it right!
 

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Driving my truck with my high-heels on...
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5,509 Posts
It is possiblethat everybody is correct :- If a buissness buys a van for buissness use & then sells it the vat is due on the entire sale but a motor trader who is buying purely as stock to resell without using the vehicle may come under a different scheme .
& if you sell a commercial vehicle to Poland the VAT man gets bugger all ! :spliff:
 

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PADI Internet Specialty Diver
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..
& if you sell a commercial vehicle to Poland the VAT man gets bugger all ! :spliff:
Nope Poland is in the EU and the EU has VAT across all EU countries. Were you to sell it to Turkmenistan then the VAT is not applicable.

What a great tax. Half a dozen of us (me too) are VAT registered and don't know for sure.... :D

Chris
 

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Team Starburst
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5,275 Posts
Discussion Starter · #16 ·
VAT guide

What a great tax. Half a dozen of us (me too) are VAT registered and don't know for sure.... :D

Chris
and me a qualified beancounter not sure of the result either....
My current employr does not have a decent VAT guide either. So it is the VAT helpline tomorrow.

Thanks for the contributions everyone.
 

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Swims with More Seals
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2,037 Posts
Ona similar but differnt theme (thread hijack warning) can anyone point me to an idiots guide to VAT online.

I've just swapped jobs from working in Local Government to running bars and shops and I need to brush up on my VAT rules and theories.!!!

K XX
 

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Registered
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495 Posts
@ Kath2407

I have found that it is usually just as easy to go the Revenue and Customs website and search for the relevant guide. As far as I can make out they are all available either as a webpage or in pdf format. The search engine is pretty good.

My experiences of the helpline have been woeful as I often know more about the subject than the person answering the phone.
 

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Guru
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7,112 Posts
You don't pay VAT on the margin - the dealer does. If a vehicle falls out of VAT qualifying status - I'm pretty sure it can't "fall back in"
 
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