VAT on 2nd hand watch

[97lude]

Should a company be charging VAT on a 2nd hand watch? I bought a Rolex Datejust a couple of years ago for £3795 including VAT, looking on eBay, similar watches can be had for approx £3200. Would I have been better off buying privately or from a company for the additional £600 and having the reassurance of a genuine watch and a warranty?

[PJ S]

As a commercial business and reseller, presumably turning over more than the legal threshold, then yes, they should (and are required) to register and therefore charge VAT. This is applicable irrespective of whether the commodities are brand new or pre-owned.

[Magic919]

Don't forget the Margin Scheme.

[clockworks]

Isn't VAT on secondhand items only payable (by the dealer, to HMRC) on the profit element, rather than the final retail price?

[gvij]

Yes if the company buys a watch for 5k and sells for 6k vat is payable only on the 1k 'fee' so if they need to make 1k profit they will sell for 6200 then and hand 200 to Hmrc

[andy tims]

97lude said:

Should a company be charging VAT on a 2nd hand watch? I bought a Rolex Datejust a couple of years ago for £3795 including VAT, looking on eBay, similar watches can be had for approx £3200. Would I have been better off buying privately or from a company for the additional £600 and having the reassurance of a genuine watch and a warranty?

The horse has bolted on this one. To me the premium would not have been good value.

[97lude]

gvij said:

Yes if the company buys a watch for 5k and sells for 6k vat is payable only on the 1k 'fee' so if they need to make 1k profit they will sell for 6200 then and hand 200 to Hmrc

So in this instance, they have charged me the full 20% VAT on top of the net price. Had they been operating on the margin scheme, shouldn't they have charged me no VAT at all and only paid 20% of the profit to HMRC?

[LaurasOtherHalf]

97lude said:

gvij said:

Yes if the company buys a watch for 5k and sells for 6k vat is payable only on the 1k 'fee' so if they need to make 1k profit they will sell for 6200 then and hand 200 to Hmrc

So in this instance, they have charged me the full 20% VAT on top of the net price. Had they been operating on the margin scheme, shouldn't they have charged me no VAT at all and only paid 20% of the profit to HMRC?

Not really, your OP says you were invoiced a total price "including VAT", unless you were provided with a "VAT Invoice" which would legally give you a breakdown of all the financial elements of the transaction, you are simply guessing.

Or to put it another way, you paid a premium to buy a watch from a respected trader. How much was VAT, cost or profit to the trader is irrelevant to you as long as you're
a/ not looking to claim the VAT back
or
b/ happy with the purchase price.

[jshell]

You can't claim VAT back on a second hand watch. I've tried.

[LaurasOtherHalf]

jshell said:

You can't claim VAT back on a second hand watch. I've tried.

Shirley you can if it meets your businesses vat deductible criteria. I couldn't for instance, but a VAT registered luxuary goods dealer could if it was deemed a business transaction.

[DavidY]

It depends if its sold within the Margin Scheme or not

If I buy xxx for my business and the product is sold through the Margin Scheme, then I cannot reclaim the VAT

If I buy xxx for my business and the product is sold with normal VAT applied, then I can reclaim the VAT

[jshell]

LaurasOtherHalf said:

jshell said:

You can't claim VAT back on a second hand watch. I've tried.

Shirley you can if it meets your businesses vat deductible criteria. I couldn't for instance, but a VAT registered luxuary goods dealer could if it was deemed a business transaction.

Sorry, I meant for export. VAT is chargeable on the profit element though.

[Magic919]

You can't reclaim VAT whee the item is sold under the Margin Scheme.

[97lude]

Magic919 said:

You can't reclaim VAT whee the item is sold under the Margin Scheme.

Can you charge VAT when the item is sold under the Margin Scheme?

[Magic919]

You always do, but maybe that isn't your question. You can sell items outside the Margin Scheme and charge the VAT in a standard manner. This depends on how you acquired the goods.

[V8EVG]

Hi

I buy all of my pre-owned unworn watches through the vat margin scheme. Simply I pay tax on the retained profit.
All the best

Jonathan

Edited by eybic on Sunday 15th March 17:41