Calling all car dealers - advice for home dealing

[Eric Mc]

Defintely not.

VAT calculated on the Margin Scheme on second hand cars is NEVER quoted separately on the sales invoice and the buyer is unable to reclaim that VAT either - even if they are a VAT registered business.

VAT is not as straightforward as many people might think.

Edited by Eric Mc on Wednesday 27th February 14:15

[KingRichard]

Eric Mc said:

VAT is not as straightforward as many people might think.

Edited by Eric Mc on Wednesday 27th February 14:15

I've NEVER found it straightforward. Loads of things have different rates of VAT, it's not all 17.5%. Bloody confusing really, but keeps the accountants in business

[JeffC]

jamesw2000 said:

So eric I am right in thinking you pay VAT on the margin you make? ie the £800 - Would the invoice to the buyer show £1485 sale price + £315 VAT? This is then in turn claimed back?

only time I would do that is if I was selling to another trader that wanted to reclaim, when I buy my cars some have the vat listed seperatly but as my stock is in and out within a few weeks theres no point in me claiming it back, suppose if you had stock for a long time you would draw the vat from the sale, I would guess if you sold the car at a loss you would maybe benefit.

[Eric Mc]

If you want to show the VAT on the sale of a car, the car must be sold outside of the "Margin Scheme". In other words, it is bought from a VAT registered trader and the VAT reclaimed by you. When it is sold, VAT must be declared on the full sale value of the car (not the mergin). Whether the purchaser is able to reclaim that VAT in turn is down to the circumstances in which the purchaser intends to use the car. The circumstances in which a VAT registered business can reclaim the VAT on the purchase of a car are very limited.

[smartie]

and a used car would also need to be still VAT qualifying.

[jamesw2000]

Eric Mc said:

VAT is not as straightforward as many people might think.

Edited by Eric Mc on Wednesday 27th February 14:15

I thought 'Tax didn't have to be taxing'

Is there more info on the HMRC website on how this margin based scheme works? I'd be interested to find out more about it.

Edited by jamesw2000 on Wednesday 27th February 19:27

[Eric Mc]

I'm sure there is.

There will be a VAT Notice on how the scheme works and these notices are available to download on the HMRC website.

[Chrisgr31]

911 Turbo LE said:

I sold my car showroom and sales site to a property deloper 12 months ago and began selling Merc's BMW'S and other prestige cars from home. I have a motor trade policy pay all my income tax VAT etc. Last week i received a letter from the local council Quote "Breach of town and country planning act 1990 section 171C " It points out the possibilty of a fine of up to £5,000, I tried to ignore it. They now have made a few phone calls, The council have a list of all the cars i have advertised from local papers also from internet tradng sites for the last 12 months.I have to arrange an appointment to see them and a 10 page document to fill in to declare all.
Not sure where this is going so i have now left my cars on SOR with a dealer friend. They may be looking to charge buisness rates back dated for the time i traded from home, My showroom used to cost £930.00 per month.

The business rates on a car showroom would be significantly higher than the rates on your driveway. For a car showroom the property would be assessed at a rate £ sq metre (varying according to use, size, quality etc) and then each car sales space would be assessed individually and added to it.

When working from home the number of spaces on your drive would be assessed but of course your garage/office/study is also used domestically and therefore could be exempt. Your RV would also be virtually small enough to qualify as a small business and the releifs that brings. (Fairly insignicant at RV £15,000 but significant at less than RV £5,000.).

If the Council have already started enforcement action you would alos have a good claim to seek a reduction in the RV for the enforcement action as well.

In the meantime King Richard would be wise to check his current Rateable Value and hw the valuation is made up. I act for a number of car dealers in Kent so may be able to give a bit of additional advice on Business Rates if he PMs me the address of the property.

[911 Turbo LE]

The business rates on a car showroom would be significantly higher than the rates on your driveway. For a car showroom the property would be assessed at a rate £ sq metre (varying according to use, size, quality etc) and then each car sales space would be assessed individually and added to it.

When working from home the number of spaces on your drive would be assessed but of course your garage/office/study is also used domestically and therefore could be exempt. Your RV would also be virtually small enough to qualify as a small business and the releifs that brings. (Fairly insignicant at RV £15,000 but significant at less than RV £5,000.).

If the Council have already started enforcement action you would alos have a good claim to seek a reduction in the RV for the enforcement action as well.

In the meantime King Richard would be wise to check his current Rateable Value and hw the valuation is made up. I act for a number of car dealers in Kent so may be able to give a bit of additional advice on Business Rates if he PMs me the address of the property.
[/quote]

I had up to 10 cars on my drive, The council called at my house and said it is unacceptale, they said i can only have 3 or 4 for private use. They will not allow me to trade from home at all.

[Eric Mc]

Councils can differ in their approach depending on where you live. Different councils will also apply different criteria.