Part time motor trader

[Nmk123]

Hi all!

Im lookig to start as a part time motor trader buying and selling used cars from home/currant business premesis

I have a local auction centre and BCA close to my currant business. Im comfortable with purchasing cars, evaluating cars and selling on. The bit which i require further knowledge of is the paper work and business side of it all

So im looking to continue as a sole trader and im aware of trade insurance & trade plates but how do i register stock in the business name, am i required to do further (i have read on MID i have to list the car after having it for 14 days) do i charge VAT on the cars, what paper work is required

Im sort of looking for a detailed step by step of how to do this. I know how to buy sell trade etc and im going for a meeting today at my local trading standards office to ensure i trade within the law but as i say its the rest of the subject really

I appreciate some people will come back with, dont do this if you dont know the trade blah blah but you have to learn and start somewhere and im prepared to take the risks involved

Thanks...help would be much appreciated!

[Nmk123]

Eric Mc said:

I think this is more of a "business" query rather than an "employment" query - and would probably fare better in "The Business Forum".

There have been many, many threads started by people thinking of becoming car dealers. A search might reveal these threads and the responses received.

Thank you i did not notice that section of the forum

[Nmk123]

pingu393 said:

I run my own business and my neighbour (who sells from home) tells me that VAT to pay HMRC is payable on the DIFFERENCE between purchase and sale price (on invoices), BUT the threshold is based on the cumulative sale prices (turnover).

Example

Purchase price £7,200
Sale price £8,200
Cost to prepare £250
Profit £750

Do this ten times, the turnover is £82,000 - and you must declare yourself to HMRC for VAT.

There would be a £167 element to pay HMRC on each car. If all the £500 you spent to prepare the car was VAT eligible, then £41 could be reclaimed. You would owe the VATman the balance (£167-£41=£126)

Your actual profit would be £750-£126 = £624 per car

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If you only sold 9 cars, your turnover would be £73,800 (which is less than the VAT threshold).

Your profit per car would be £750.

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As you can see, there is a big advantage if you can keep your turnover below the threshold.

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As an aside, lern to spel

Thank you. That is great ... I totally understand that

[Nmk123]

tooldtocruise said:

Stick to one auction and get a trade account going (some auctions are easy some are not) to keep it simple on the first few buy with long mots
try and give them a good drive about to find any faults (get them fixed) get a market value and place your add
i keep it simple no paint and no servicing unless needed
keep your costs low

what type of cars (value) will you be selling ?

The auction centre near me allows me to open a trader account. Just been to ask and if im a registered sole trader they are fine with it

But as i say my main concern is ensuring when i trade im within the law. So i spoke with trading standards yesterday and thats cleared up...its making sure when i buy sell and have possession of a car im within the law ... Making sure all paper work is correct, vehicle is registered correctly etc etc

[Nmk123]

Ill work that out. Ill ask the Trade insurance for ways round that but again this post is about the paper work side of it and ensuring im in the law...please read the above

I appreciate all your help so far

[Nmk123]

Just following up on this ...

I wanted to know the legality of trading cars in the UK. I wanted to know the procedure needed in place to ensure i legally trade (documents paper work, registering vehicles, trade insurance, etc etc)

May i add I'm also looking to trade maybe 3 or 4 cars a month from my currant business premises which is a lockup/unit on a local industrial estate

Thanks in advanced for any help that can be provided

[Nmk123]

Yes i can trade from my currant premesis and i wish to stock cars with a value of up to 12k. Mainly the A3, 1 series & golf range with the likes of insignias, passats, c class & 3 series. The clientele in the area have quite high disposible incomes and the industrial estate where im based employ many young (18-30) aged people

I have done some homework this side of the business...its the legality od trading i dont know. As i say v5, insurance bla bla...read above ^^^

[Nmk123]

No i wanted to know about trade insurance. So many options...whats the difference on the policies ? Which would you recommend ?

[Nmk123]

Wow that was some great advice and explained very very well. Following your advice i would be inclined to find a local broker who i can meet and discuss my policy with to ensure my cover fully covers me and my business premises.

Do you recommend any direction with getting finance brokers on board ? I believe Santander have a specialist unit that assist with finance for the motor trade and provide business mentor etc while also opening a business account with themselves.

Also when trading the cars, see my questions below

1. How do i fill out the V5 if the car is from a previous owner ? Do i fill out the traders section send that off and ask the previous owner to sign the bottom of the V5 so that the new owner signs the bottom of the V5 and then send the remaining to DVLA when i make the sale ?

2. I believe when i have a car in traders possession i have to ring my insurance to have the car listed on MID. I also have to list my trade plates on MID as well ?

3. I believe cars must be sold with 3 months warranty. Do you recommend any warranty companies to handle this ?

How do you trade a car legally in the UK ? What is the step by step requirements. I can buy and sell easily not a problem its the legality in between im struggling with

Many thanks
Nic V.