VAT on converted motorhome sale
Discussion
I will speak to HRMC to get a definitive answer, but hoping someone where might have an idea where I stand on this.
As a sole trader I bought a van privately, no VAT and while I was not VAT registered.
I converted it to a motorhome, kept all receipts and when I became VAT registered I reclaimed all VAT on parts purchased to convert the vehicle, which is now a motor-caravan with DVLA. The vehicle has been solely used for business purposes, no private use.
Now I am looking to sell the van, but not sure where I stand with VAT.
Rough costs involved, £6k van purchase (no VAT), £6k conversion cost (inc vat).
As a sole trader I bought a van privately, no VAT and while I was not VAT registered.
I converted it to a motorhome, kept all receipts and when I became VAT registered I reclaimed all VAT on parts purchased to convert the vehicle, which is now a motor-caravan with DVLA. The vehicle has been solely used for business purposes, no private use.
Now I am looking to sell the van, but not sure where I stand with VAT.
Rough costs involved, £6k van purchase (no VAT), £6k conversion cost (inc vat).
Profit is never really part of normal VAT consideration. It is, in most cases, a turnover tax.
You bought a base vehicle and did not reclaim VAT on that purchase. You then spent I presume a reasonable amount of money on converting the vehicle into a motor home. You reclaimed the Input VAT on those costs.
Now that you are selling the motor home, my reasoning would be that VAT should be charged on the sales value of the vehicle - whether you are intending to generate a profit on the sale or not.
And don't forget the capital allowances adjustment that will need to be made when preparing the business tax calculations later.
You bought a base vehicle and did not reclaim VAT on that purchase. You then spent I presume a reasonable amount of money on converting the vehicle into a motor home. You reclaimed the Input VAT on those costs.
Now that you are selling the motor home, my reasoning would be that VAT should be charged on the sales value of the vehicle - whether you are intending to generate a profit on the sale or not.
And don't forget the capital allowances adjustment that will need to be made when preparing the business tax calculations later.
So VAT only applies because of the change of vehicle status with the DVLA/HMRC?
The fact that VAT was paid (by previous owner) on the van doesn't come into it?
I admit I didn't expect to have to charge VAT on the full sale price, but maybe a % given of the cost of conversion or margin rate as its second hand.
The fact that VAT was paid (by previous owner) on the van doesn't come into it?
I admit I didn't expect to have to charge VAT on the full sale price, but maybe a % given of the cost of conversion or margin rate as its second hand.
matt-ITR said:
So VAT only applies because of the change of vehicle status with the DVLA/HMRC?
The fact that VAT was paid (by previous owner) on the van doesn't come into it?
I admit I didn't expect to have to charge VAT on the full sale price, but maybe a % given of the cost of conversion or margin rate as its second hand.
VAT applies because YOU changed its VAT status by reclaiming the Input VAT on the conversion costs.The fact that VAT was paid (by previous owner) on the van doesn't come into it?
I admit I didn't expect to have to charge VAT on the full sale price, but maybe a % given of the cost of conversion or margin rate as its second hand.
Nicmenicnic said:
pretty sure that you only need to charge VAT on the profit of the vehicle......so if it cost you 6k no vat and you sell it for 26k you will need to pay/charge the vat on the 20K difference.......
VAT only on the profit is for motor traders. You're a VAT registered business, so you charge VAT on sales or disposals of all business assets or goods.
Your accountants will pick this up and will notify HMRC of your underpayment at your year end.
Death & the Inland Revenue
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