VAT and vehicles

[DonnyMac]

Tomorrow (Monday 19/10/14), I'm buying a VW transporter @ £16,250 + VAT with a view to convert it to a caravan / day van before moving it on, hopefully making a profit along the way.

I have the opportunity to either pay for it personally or put it through one of my VAT registered companies.

So the question is for those that know, which is the best route, personal purchase take a hit on the £3k tax and resell without VAT or put the VAT through the company and sell it +VAT through the firm?

Also, I'm sure there's some special rules on reclaiming VAT on vehicles?

Thanks for your help in advance.
Donny.

[Maz_uk]

DonnyMac said:

Tomorrow (Monday 19/10/14), I'm buying a VW transporter @ £16,250 + VAT with a view to convert it to a caravan / day van before moving it on, hopefully making a profit along the way.

I have the opportunity to either pay for it personally or put it through one of my VAT registered companies.

So the question is for those that know, which is the best route, personal purchase take a hit on the £3k tax and resell without VAT or put the VAT through the company and sell it +VAT through the firm?

Also, I'm sure there's some special rules on reclaiming VAT on vehicles?

Thanks for your help in advance.
Donny.

Surely + vat every time unless you can afford to give away £3k!

Buy vehicle through company, reclaim the vat and then charge vat on higher price when sold would be the correct way to do it.

[DonnyMac]

Initially it seems that way but there was a complication that I wasn't 100% sure on vehicle VAT, I'm now happy that it is fully reclaimable.

However, let's say the product is worth £35k on completion with VAT that goes up to £42k to the end user (and apparently selling at this) if I stump up the £3k on initial purchase I can sell the product at £39k without VAT, be £3k more competitive, make a £1k profit on the this chosen route with regard to the VAT element and recoup the initial capital quicker to start the process again x2.

The other route has me being VAT neutral on purchase (claim it back) but charge out an additional £7k on the end product being less competitive by losing the price point advantage. The only benefit I see to this VAT route is reclaiming on the products required to convert, however these are being sourced at minimal trade costs so could still be relatively cost neutral either way.

Unless there's legislation or I've missed something blindingly obvious it seems that buying personally is the better option?

Anyhow, for anyone that has further advice feel free to give it even after tomorrow as I've got a VAT quarter to consider the best route.

[caziques]

Buy through the company, reclaim VAT. Sell it to yourself, unfortunately making a loss, pay the VAT.

Fix it up - sell personally, no VAT

No doubt Eric will be along to tell us the legal way of doing it.

[LeighW]

Are you buying it with the sole intention of selling at a profit, or will you use it yourself for a while after you've converted it? If it's a business transaction, it's a business transaction!

Are you converting it yourself, or paying someone to do it? If you're paying someone else to do it, you'll probably make very little profit.

If you trade it through your business, you'll make it more expensive to the end purchaser who won't be able to reclaim the VAT. There's also the small issue of paying tax on your profit if you buy/sell it through your business. That's before you get to other potential problems, such as possible come back issues from the buyer after the sale, having to get the conversion certified etc, etc.

[DonnyMac]

LeighW said:

Are you buying it with the sole intention of selling at a profit, or will you use it yourself for a while after you've converted it? If it's a business transaction, it's a business transaction!

Are you converting it yourself, or paying someone to do it? If you're paying someone else to do it, you'll probably make very little profit.

If you trade it through your business, you'll make it more expensive to the end purchaser who won't be able to reclaim the VAT. There's also the small issue of paying tax on your profit if you buy/sell it through your business. That's before you get to other potential problems, such as possible come back issues from the buyer after the sale, having to get the conversion certified etc, etc.

The only intention is to generate profit, no personal use.
It is being done at material cost with no labour by professionals (not me).
The tax man always gets a chunk.
Little concern on dissatisfied customers, van will have 2.5 years manufactures warranty and be certified.

I still don't see much benefit in reclaiming the initial VAT?