VAT and van selling advice please
Discussion
The traders who sold you those vans didn't get to keep the VAT they were charging you. When you are a VAT registered trader, you become tax collecting agent (unpaid of course) on behalf of the Government. As far as they were concerned, the sale price really was the £12,000 they charged you BEFORE they added on the VAT.
If you were VAT registered, whatever you wished to sell the vans for, you would have to add on the VAT amount and bill your customer the combined total. You, of course, would not be allowed to keep the VAT amount for ypourself as you would be required to pay it over to HM Revenue and Customs.
If you were VAT registered, whatever you wished to sell the vans for, you would have to add on the VAT amount and bill your customer the combined total. You, of course, would not be allowed to keep the VAT amount for ypourself as you would be required to pay it over to HM Revenue and Customs.
Eric
The problem is that the van will only be worth the exVAT price. If you can't reclaim the VAT back when you buy the van you will effectively lose it as:-
Buy Van for 12K + VAT, not VAT registered costs £14,100
No VAT registered buyer is going to pay more than 12K for the van as he can go and buy one from someone else for 12K+VAT and reclaim the VAT back.
To get good value for the vehicle you have to try and find a non-VAT registered punter. Very Difficult.
The only advantage is that the asset figure for depreciation starts at £14.1K rather thna £12K
The same thing happened to me when I personally bought a Land Rover Defender, this was taken out of VAT system as I bought it.
davidy
The problem is that the van will only be worth the exVAT price. If you can't reclaim the VAT back when you buy the van you will effectively lose it as:-
Buy Van for 12K + VAT, not VAT registered costs £14,100
No VAT registered buyer is going to pay more than 12K for the van as he can go and buy one from someone else for 12K+VAT and reclaim the VAT back.
To get good value for the vehicle you have to try and find a non-VAT registered punter. Very Difficult.
The only advantage is that the asset figure for depreciation starts at £14.1K rather thna £12K
The same thing happened to me when I personally bought a Land Rover Defender, this was taken out of VAT system as I bought it.
davidy
Maybe he should try and flog it to a non-VAT registered buyer?
It does go to show the iniquities created by having very high registration thresholds for VAT. Maybe it should be like Austria, where ALL traders have to register, irresepctive of turnover. At least it creates a level playing field for everyone.
It does go to show the iniquities created by having very high registration thresholds for VAT. Maybe it should be like Austria, where ALL traders have to register, irresepctive of turnover. At least it creates a level playing field for everyone.
Can he not register for VAT before selling, and as the vans are assets he still owns he can reclaim the VAT on the original purchase invoice (if he still has it)
He would then need to charge VAT (and pay this over) on the sale.
Seems like an awful lot of hassle for a couple of hundred quid and hardly a good reason to decide to register for VAT or not!
He would then need to charge VAT (and pay this over) on the sale.
Seems like an awful lot of hassle for a couple of hundred quid and hardly a good reason to decide to register for VAT or not!
smartie said:
Can he not register for VAT before selling, and as the vans are assets he still owns he can reclaim the VAT on the original purchase invoice (if he still has it)
He would then need to charge VAT (and pay this over) on the sale.
Seems like an awful lot of hassle for a couple of hundred quid and hardly a good reason to decide to register for VAT or not!
Sadly its not a couple hundred quid but more like £10-12K. my accountant said if i were to register ow then sell up it would all be a bit suss.He would then need to charge VAT (and pay this over) on the sale.
Seems like an awful lot of hassle for a couple of hundred quid and hardly a good reason to decide to register for VAT or not!
smartie said:
would registering be beneficial anyway, regardless of the vans?
I am winding the business up now so no more trading to be done and the turnover was very low anyway. I tried but couldnt compete with a local company who then got a franchise and have prime position in town.I can see where your accountant is coming from then, but it might be worth checking with a VAT specialist to see if you are actually doing anything wrong by doing this?
www.vatease.co.uk
??
www.vatease.co.uk
??
Gassing Station | Business | Top of Page | What's New | My Stuff