Discussion
This may sound like a stupid question but I am currently not vat registered but I can guarantee next financial year I will be over the threshold. So I have a question.
If I was to buy for example a drill off a private individual for cash with no vat and sell it back on through my business being vat registered would I still have to charge vat or can it now be sold without vat as I never paid it in the first place?
I only ask as I know a commercial vehicle dealer if they get a van in px and the seller is not vat registered they can then sell it on without charging vat. Does the same apply to other 2nd hand transactions?
If I was to buy for example a drill off a private individual for cash with no vat and sell it back on through my business being vat registered would I still have to charge vat or can it now be sold without vat as I never paid it in the first place?
I only ask as I know a commercial vehicle dealer if they get a van in px and the seller is not vat registered they can then sell it on without charging vat. Does the same apply to other 2nd hand transactions?
Edited by ac-x8bkd on Friday 10th November 15:53
The VAT registration amount is for the preceding 12 months, not the previous financial year.
When I registered we passed the threshold three weeks later.
We then struggled to increase turnover and profit the next year because we had effectively lost 13.04% out of our existing turnover.
When I registered we passed the threshold three weeks later.
We then struggled to increase turnover and profit the next year because we had effectively lost 13.04% out of our existing turnover.
It's part of the Making Tax Digital initiative. Originally MTD was all about abolishing Self Assessment and the need to submit annual tax returns for sole traders and partnerships. - commencing in April 2018. That has been postponed to April 2020 (possibly longer).
However, integrating this new system into VAT was always part of the grand plan. What's happening now is that the VAT aspects of MTD are being introduced first (April 2019).
What will happen is that, from April 2019, the old style VAT return is abolished. Instead. VAT registered traders will submit their VAT returns using commercial software and will do so directly from that software without having to enter the Government Gateway and fill in HMRC designed boxes on a screen. So far, so pretty straightforward.
There are a number of complications.
As mentioned, HMRC has not indicated yet how traders who use specialist VAT schemes (such as second hand margin schemes, retail schemes, Tour Operator Margin Scheme etc etc) will use VAT MTD.
The new rules apply to VAT traders who are operating above the VAT registration threshold (currently £85,000). There are many VAT registered trades who are actually below the compulsory turnover limits but chose to register voluntarily. After initial; confusion as to what they were supposed to do, HMRC recently clarified that they DO NOT have to go onto VAT MTD unless their turnover exceeds the threshold. Once on VAT MTD, they can never return to the old system.
One of the main objectives of MTYD is to eventually abolish the current Government Gateway system. Because they are keeping the old VAT return system running to facilitate smaller VAT registered traders, it's obvious that the old system will have to continue in parallel to the new system for quite a while.
However, integrating this new system into VAT was always part of the grand plan. What's happening now is that the VAT aspects of MTD are being introduced first (April 2019).
What will happen is that, from April 2019, the old style VAT return is abolished. Instead. VAT registered traders will submit their VAT returns using commercial software and will do so directly from that software without having to enter the Government Gateway and fill in HMRC designed boxes on a screen. So far, so pretty straightforward.
There are a number of complications.
As mentioned, HMRC has not indicated yet how traders who use specialist VAT schemes (such as second hand margin schemes, retail schemes, Tour Operator Margin Scheme etc etc) will use VAT MTD.
The new rules apply to VAT traders who are operating above the VAT registration threshold (currently £85,000). There are many VAT registered trades who are actually below the compulsory turnover limits but chose to register voluntarily. After initial; confusion as to what they were supposed to do, HMRC recently clarified that they DO NOT have to go onto VAT MTD unless their turnover exceeds the threshold. Once on VAT MTD, they can never return to the old system.
One of the main objectives of MTYD is to eventually abolish the current Government Gateway system. Because they are keeping the old VAT return system running to facilitate smaller VAT registered traders, it's obvious that the old system will have to continue in parallel to the new system for quite a while.
voicey said:
Thanks for the info Eric. Do you know if the move to VAT MTD is going to mean monthly returns?
No, it's currently perceived to be maintained at the normal quarterly intervals.However, under CURRENT VAT rules, monthly and even YEARLY VAT returns are allowed. It's not yet clear whether MTD will also be as flexible.
Eric Mc said:
VAT registered traders will submit their VAT returns using commercial software and will do so directly from that software without having to enter the Government Gateway and fill in HMRC designed boxes on a screen. So far, so pretty straightforward.
So the trader has to spend money on commercial software to continue performing tax gathering activities for HMRC.Charming.
jammy-git said:
Also, I believe you have to look at whether you've hit the threshold over the last 12 months, not per financial year.
ac-x8bkd said:
I am trying my best to keep under this year just to make my accounts easier.
Yes I was always told that if you hit the threshold in any 12 month period you should register? Not necessarily in your own trading financial or calendar year.Edited by cts1975 on Tuesday 14th November 18:44
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