Discussion
Ok, so i know vat is included in the new car price.
Is it included in the price of a used car at dealers? If a dealer is vat registered, is it the rule that one is paying vat on used cars?
When comparing new and used car prices, why do folk not deduct VAT to arrive at the principle sum ex vat, and then compare with a used car price?
what does it mean when the phrase "vat qualifying" is used on a usd car for sale please?
Help.
Is it included in the price of a used car at dealers? If a dealer is vat registered, is it the rule that one is paying vat on used cars?
When comparing new and used car prices, why do folk not deduct VAT to arrive at the principle sum ex vat, and then compare with a used car price?
what does it mean when the phrase "vat qualifying" is used on a usd car for sale please?
Help.
911fan said:
Ok, so i know vat is included in the new car price.
Is it included in the price of a used car at dealers? If a dealer is vat registered, is it the rule that one is paying vat on used cars?
When comparing new and used car prices, why do folk not deduct VAT to arrive at the principle sum ex vat, and then compare with a used car price?
what does it mean when the phrase "vat qualifying" is used on a usd car for sale please?
Help.
VAT is the same on a VAT Qualifying Used car (a car that has been owned by a Dealer or Contract Hire / Rental Company typically)as a New one. Is it included in the price of a used car at dealers? If a dealer is vat registered, is it the rule that one is paying vat on used cars?
When comparing new and used car prices, why do folk not deduct VAT to arrive at the principle sum ex vat, and then compare with a used car price?
what does it mean when the phrase "vat qualifying" is used on a usd car for sale please?
Help.
Once someone buys it that can't claim the VAT back, it becomes a Marginal vehicle for VAT purposes...
(VAT is not show on your invoice)
Hope that helps...
Dealers pay VAT on the profit they make on a used car. VAT qualifying..see this thread http://www.pistonheads.com/gassing/topic.asp?h=0&a...
A Vat Qualifying invoice would split the Vat out on the invoice...
A £12,000 car would show as £10,000 + £2000 Vat
A Vat Marginal invoice would not show Vat on the invoice...
A £12,000 would show as £12,000 on your invoice.
(It makes not one jot of difference to how much a private customer pays for it, just how much Vat the dealer pays the tax man!!)
_gez_ said:
Dealers pay VAT on the profit they make on a used car. VAT qualifying..see this thread http://www.pistonheads.com/gassing/topic.asp?h=0&a...
They pay VAT on the difference between what they buy it for, and what they sell it for...Not the profit!
Regardless of how much preparation / reconditioning is done, warranty given, or any other expense.
Stevej33 said:
They pay VAT on the difference between what they buy it for, and what they sell it for...
Not the profit!
Regardless of how much preparation / reconditioning is done, warranty given, or any other expense.
But, as a VAT registered business, they can presumably claim VAT back on their purchases (such as VAT on a 3rd party wheel refurb, cleaning materials etc.)Not the profit!
Regardless of how much preparation / reconditioning is done, warranty given, or any other expense.
The explanations given are correct, but the reason why an advert may specify "VAT qualifying" is because it will make a difference if you want to contract hire it.
Let me explain...
A Contract Hire company is allowed to claim the VAT back on cars (as are car dealers, taxi firms, funeral directors and only a very few other businesses).
So, in the example above if you want to Contract Hire the £12,000 car if it's VAT Qualifying the CH co will only have a net outlay of £10,000 and when they come to sell it X years down the line they don't lose out to the VAT man - if they sell it for £6000 that's £5000+VAT.
If they bought a £12,000 "margin" car their outlay would be £12,000, which would be reflected in the monthly payments.
A separate point on the margin scheme is that whilst VAT is charged on the whole gross margin (difference between purchase and sale price), it is not reclaimable if you make a loss.
For example, you buy two cars for £10,000 and £12,000 and sell them for £12,000 and £10,000 respectively it would appear that you have drawn even. If both cars were VAT Qualifying then you would indeed owe nothing, but if they're Margin Scheme cars you still have to pay the VAT on the £2000 gross margin - i.e about £333.
Let me explain...
A Contract Hire company is allowed to claim the VAT back on cars (as are car dealers, taxi firms, funeral directors and only a very few other businesses).
So, in the example above if you want to Contract Hire the £12,000 car if it's VAT Qualifying the CH co will only have a net outlay of £10,000 and when they come to sell it X years down the line they don't lose out to the VAT man - if they sell it for £6000 that's £5000+VAT.
If they bought a £12,000 "margin" car their outlay would be £12,000, which would be reflected in the monthly payments.
A separate point on the margin scheme is that whilst VAT is charged on the whole gross margin (difference between purchase and sale price), it is not reclaimable if you make a loss.
For example, you buy two cars for £10,000 and £12,000 and sell them for £12,000 and £10,000 respectively it would appear that you have drawn even. If both cars were VAT Qualifying then you would indeed owe nothing, but if they're Margin Scheme cars you still have to pay the VAT on the £2000 gross margin - i.e about £333.
Diesel130 said:
Stevej33 said:
They pay VAT on the difference between what they buy it for, and what they sell it for...
Not the profit!
Regardless of how much preparation / reconditioning is done, warranty given, or any other expense.
But, as a VAT registered business, they can presumably claim VAT back on their purchases (such as VAT on a 3rd party wheel refurb, cleaning materials etc.)Not the profit!
Regardless of how much preparation / reconditioning is done, warranty given, or any other expense.
What it also means is that there is no advantage in paying cash to have any work done, because you'll still end up paying what's owed. The scheme does throw up a couple of odd scenarios. If you spend too much on expenses without a VAT content then it's possible to lose money even if you actually drew a theoretical profit. Your own labour is the most dangerous one. So Ed China and his mate wouldn't always draw a Wheeler Dealer profit.
You pay 4 grand for a motor and sell it for 5. A healthy grand in the old sky rocket. Unfortunately you had to do a bit refurb. You know the sort of thing, wire brush the wheels and give them a quick rattle with the aerosol can, peel a few bananas and get the skin shoved in the diff to quieten it down a bit, plod up the holes in the sills, gun gum up the exhaust and have a good rummage round the interior to find the missing body parts after the accident. Anyway, long and short it took the lads a bit longer than expected. You spent £850 in wages getting it sorted. Not to worry, you can't win 'em all, a profit's a profit and £150 will cover a couple of plates of grub and a bottle of glug down the Frog & Tadpole.
There is however a bitter sting in the tail. Victor from the VAT office popped round for his bit of wedge, just under £170 leaving our hapless dealer out of pocket!
So anything you pay out in the course of a year, most importantly you wage bill in effect has VAT added onto it at 20%. Harsh!
Henry
I guess all the indies run two companies, and one invoices the other for prep work.
Also they can invoice each other to keep the total anual tax bill down just keep one under 40k proffit so less TAX over all paid.
Seems simple to get around imo and saves even more money going to to the tax man.
Also they can invoice each other to keep the total anual tax bill down just keep one under 40k proffit so less TAX over all paid.
Seems simple to get around imo and saves even more money going to to the tax man.
Henry-F said:
You pay 4 grand for a motor and sell it for 5. A healthy grand in the old sky rocket. Unfortunately you had to do a bit refurb. You know the sort of thing, wire brush the wheels and give them a quick rattle with the aerosol can, peel a few bananas and get the skin shoved in the diff to quieten it down a bit, plod up the holes in the sills, gun gum up the exhaust and have a good rummage round the interior to find the missing body parts after the accident. Anyway, long and short it took the lads a bit longer than expected. You spent £850 in wages getting it sorted. Not to worry, you can't win 'em all, a profit's a profit and £150 will cover a couple of plates of grub and a bottle of glug down the Frog & Tadpole.
Henry
Which car was that? I haven't seen anything sell on your site for £5k for a while? ;-)Henry
MrCooke said:
thegoose said:
the reason why an advert may specify "VAT qualifying" is because it will make a difference if you want to contract hire it.
Or export it outside the EU.wouldn't have thought so.. vat is paid on the gross diff between buying and selling prices, irrespective of prep etc. there is no input element, so accouting for prep vat is irrelevant to the tax paid on the margin. invoicing prep from a second company, plus vat, is no different to internal invoicing with no vat, apart from in terms of cashflow.
also, corp tax remains across companies and div tax is a personal liability
also, corp tax remains across companies and div tax is a personal liability
Sorry, good point, well made - forgot about that angle altogether. I've sold cars to buyers abroad in the last couple of weeks too - Zambia and Norway, but neither were VAT qualifying (v little of my stock ever is).
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although the car may not be vat qualifying, you should be able to avoid paying vat on the margin if you can show the car was exported
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although the car may not be vat qualifying, you should be able to avoid paying vat on the margin if you can show the car was exported
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