Can someone explain what "VAT Qualifying" means...
Discussion
Rochester TVR said:
So do I need to deduct 17.5% from the £39,990 to get the true price?
Is it as simple as that?
It will cost you £39,990. However, if you are a VAT registered business and the car is used exclusively for business purposes you can recover VAT as with any other business cost. Is it as simple as that?
Deloitte&Touche
Edited by J111 on Friday 1st August 11:53
J111 said:
Rochester TVR said:
So do I need to deduct 17.5% from the £39,990 to get the true price?
Is it as simple as that?
It will cost you £39,990. However, if you are a VAT registered business and the car is used exclusively for business purposes you can recover VAT as with any other business cost. Is it as simple as that?
Deloitte&Touche
If you're a chauffeur company, or car hire etc then you can claim the VAT back, it does mean that when you sell the car on it will still be VATable so you'll have a VAT element to pay out of the sale proceeds.As a private punter it makes not a scrap of difference, it is just advertised that way in case a potential customer is in the position where they can reclaim the VAT.
planetdave said:
What exactly was wrong with 'inc VAT'?
Because all used cars contain a VAT element in their price, called margin VAT, it is payable by the dealer so the customer need not know how much is being paid, nor can they reclaim it. A VAT qualifying car is different as explained above and to a business it is important to know if the car they are buying is VAT qualifying.I get the difference - it's just that it's clouding the picture for the normal punter who might shy away from making the initial call on the basis that they thought they had to pay 17.5% more on the deal coz they don't understand the advert.
If someone on here is not sure then how many John Q Publics have you not sold to?
If someone on here is not sure then how many John Q Publics have you not sold to?
planetdave said:
I get the difference - it's just that it's clouding the picture for the normal punter who might shy away from making the initial call on the basis that they thought they had to pay 17.5% more on the deal coz they don't understand the advert.
If someone on here is not sure then how many John Q Publics have you not sold to?
But your rolleyes suggested that the dealer is somehow trying to mislead the punters when in actual fact what you're saying is that some buyers don't understand VAT rules.If someone on here is not sure then how many John Q Publics have you not sold to?
Yes some private customers might not ring but with a £40k car there is a lot greater chance that a) the car will appeal to corporate buyers for whom it being VAT qualifying is crucial and b) the buyer of a car at that price point is much more likely to be in business and understand what the dealer is saying when he says it is VAT qualifying.
markmullen said:
planetdave said:
I get the difference - it's just that it's clouding the picture for the normal punter who might shy away from making the initial call on the basis that they thought they had to pay 17.5% more on the deal coz they don't understand the advert.
If someone on here is not sure then how many John Q Publics have you not sold to?
But your rolleyes suggested that the dealer is somehow trying to mislead the punters when in actual fact what you're saying is that some buyers don't understand VAT rules.If someone on here is not sure then how many John Q Publics have you not sold to?
Yes some private customers might not ring but with a £40k car there is a lot greater chance that a) the car will appeal to corporate buyers for whom it being VAT qualifying is crucial and b) the buyer of a car at that price point is much more likely to be in business and understand what the dealer is saying when he says it is VAT qualifying.
It just looks like the trade taking another opportunity to shoot itself in the foot (hence the
) using terms that are not crystal clear to all potential clients. Maybe a qualification such as 'for business users..this car is VAT qualifying' might be less gaff prone. planetdave said:
markmullen said:
planetdave said:
I get the difference - it's just that it's clouding the picture for the normal punter who might shy away from making the initial call on the basis that they thought they had to pay 17.5% more on the deal coz they don't understand the advert.
If someone on here is not sure then how many John Q Publics have you not sold to?
But your rolleyes suggested that the dealer is somehow trying to mislead the punters when in actual fact what you're saying is that some buyers don't understand VAT rules.If someone on here is not sure then how many John Q Publics have you not sold to?
Yes some private customers might not ring but with a £40k car there is a lot greater chance that a) the car will appeal to corporate buyers for whom it being VAT qualifying is crucial and b) the buyer of a car at that price point is much more likely to be in business and understand what the dealer is saying when he says it is VAT qualifying.
It just looks like the trade taking another opportunity to shoot itself in the foot (hence the
) using terms that are not crystal clear to all potential clients. Maybe a qualification such as 'for business users..this car is VAT qualifying' might be less gaff prone. The car for sale has to meet certain criteria in order to be 'VAT Qualifying' - I can't remember exactly what they are, but think may have to be under 2 years old or something similar (might be a mileage limit as well).
I am sure someone can confirm.
Edited by BAHN-STORMA on Friday 1st August 20:44
A couple of questions...
If the car is bought by the company (and therefore they are able to reclaim the VAT back)...
1. Does the car HAVE to be exclusively for business use? (i.e a trade van?)
1a. If not, does it get complicated when calculating how much VAT is reclaimable, splitting between personal and business.
2. Is there a limit to the period you can claim the VAT back? (Like mileage expences 40p/m > 10,000 changing to 20p/m thereafter)
3. If the car is bought by the company surely the user of the car is then subject to company car tax, which would make the savings of VAT more or less irrelevant anyway?
I have the option to buy the car either privatly or through my business but the car will be used 50/50 business / personal use so Im trying to understand which is the best way forward, and save myself a few pennies
Im going to have a chat with my accountant on monday about it, but would like to get as clued up as possible before hand.
Thanks
Lee
If the car is bought by the company (and therefore they are able to reclaim the VAT back)...
1. Does the car HAVE to be exclusively for business use? (i.e a trade van?)
1a. If not, does it get complicated when calculating how much VAT is reclaimable, splitting between personal and business.
2. Is there a limit to the period you can claim the VAT back? (Like mileage expences 40p/m > 10,000 changing to 20p/m thereafter)
3. If the car is bought by the company surely the user of the car is then subject to company car tax, which would make the savings of VAT more or less irrelevant anyway?
I have the option to buy the car either privatly or through my business but the car will be used 50/50 business / personal use so Im trying to understand which is the best way forward, and save myself a few pennies
Im going to have a chat with my accountant on monday about it, but would like to get as clued up as possible before hand.
Thanks
Lee
Rochester TVR said:
1. Does the car HAVE to be exclusively for business use?
Yes.Rochester TVR said:
2. Is there a limit to the period you can claim the VAT back? (Like mileage expences 40p/m > 10,000 changing to 20p/m thereafter)
Don't know.Rochester TVR said:
3. If the car is bought by the company surely the user of the car is then subject to company car tax, which would make the savings of VAT more or less irrelevant anyway?
Not applicable, if the vehicle is used exclusively on company business. Rochester TVR said:
the car will be used 50/50 business / personal use
Then its VAT status is of no relevance.Rochester TVR said:
Im going to have a chat with my accountant on monday about it, but would like to get as clued up as possible before hand.
Never a bad idea The D&T link I posted above is concise and, afaik, accurate.
From that link:
Deloitte and Touche said:
In practice most cars will have some element of private use which will block the buyer’s entitlement to recover VAT.
Edited by J111 on Friday 1st August 21:45
V8A*ndy said:
Shirley this means + VAT as the VAT has previously been already recovered there for qualifys FOR Vat unless you are able to claim vat back fo sole business use.
So avg Joe pays VAT on top of price no????? i'm confused now?
No it means that no VAT registered concern has claimed the initial purchase element of VAT on the car, which can only be claimed once. So avg Joe pays VAT on top of price no????? i'm confused now?
I must admit, I'm not 100% clear if this ignores the trade element (i.e. where the trade registers cars for demo purposes and thus doesn't pay full VAT) - my VAT knowledge isn't what it ought to be, but then I'm not doing a job where it is particularly relevant, plus it's a while now since I did it.
As a private punter, you pay the quoted price - £39,995 - and ignore the VAT qualifying caveat, even if it is somewhat unclear!!!
The one thing you have to be careful of as the private chappie/chappess is the ex demo sale. The dealer registers the car as a demo, doesn't pay VAT, knocks £1500 or so off the price but only pays VAT on the profit on sale. So, punter gets a couple of £k or so off the price, thinks they have a good deal, but doesn't realise that the dealer paid for the car list price less a few grand of VAT saved (minus a bit of margin VAT) and still has their usual margin to play with.
D1MAC said:
The one thing you have to be careful of as the private chappie/chappess is the ex demo sale. The dealer registers the car as a demo, doesn't pay VAT, knocks £1500 or so off the price but only pays VAT on the profit on sale. So, punter gets a couple of £k or so off the price, thinks they have a good deal, but doesn't realise that the dealer paid for the car list price less a few grand of VAT saved (minus a bit of margin VAT) and still has their usual margin to play with.
What have you to be careful of?So the customer gets the car cheaper? So what if the dealer has a bit more up his kilt? It is only an issue if you're one of these idiots that thinks dealers are charities and aren't allowed to make a profit. If the customer is happy with the price they paid what the hell difference does it make what the dealer paid for the car?
As a sidenote next time you go to a restaurant demand to know how much the steak you're eating cost, see how far it gets you.
Edited by markmullen on Saturday 2nd August 09:25
Gassing Station | General Gassing | Top of Page | What's New | My Stuff