Van finance lease, Selling van VAT?

[Contract Killer]

Im a vat registered Ltd company, I have a van on a finance lease.

Im looking to wind up the company, I understand to cancel the agreement I need to pay the remaining payments (18X £240+vat), plus the balloon of £8500+vat. so total of £12820+vat.

Then I have to sell the van on the finance companies behalf.


However, do I have to charge VAT on the sale price? I can't find any info on this.

Cheers

[Eric Mc]

Are you selling the van on BEHALF of the leasing company (i.e they still own it) or do you own it at the end of the leasing period just before you sell it?

Did you reclaim VAT on the payments you made in respect of the van?

[Contract Killer]

Eric Mc said:

Are you selling the van on BEHALF of the leasing company (i.e they still own it) or do you own it at the end of the leasing period just before you sell it?

Did you reclaim VAT on the payments you made in respect of the van?

The lease company own the van, and stipulate it must be sold to an un-related 3rd party.


Ive been Vat registered for the last 6 months, so have re-claimed vat on some of the payments.

This is the type of deal:
https://www.vanarama.com/finance-info/van-finance-...

[Eric Mc]

What happens to the proceeds on the sale of the van?

Do you get to keep those proceeds or must you pay them to the leasing company?

[Contract Killer]

Eric Mc said:

What happens to the proceeds on the sale of the van?

Do you get to keep those proceeds or must you pay them to the leasing company?

I get to keep the sale proceeds, minus 2%.

[dfen5]

It’s the lease company’s van, your company’s VAT registered and liable for the debt + VAT as I see it.

I’m no accountant but..

Your company pays the outstanding monthly’s + vat to the lease co.
Your company pays the balloon + vat to the lease co.

The total VAT on those is £2564

Your company sells the van + vat. I don’t know the value other than the balloon figure, say £8.5k plus vat, so say £1700 vat.

vat back from the van £1700 minus vat out on the balloon/monthly’s of £2564, so your vat liability in your final vat filing from this is -£864

As for the proceeds - 2%, your company keeps that and your accountant will have to work that into your balance sheet.

Sounds like an awful lease deal though

Edited by dfen5 on Saturday 11th May 22:42

[Eric Mc]

Contract Killer said:

I get to keep the sale proceeds, minus 2%.

Then you need to declare VAT on the sale and pay it to HMRC.

[rfoster]

Speak with the lease company - they may just need you to advise them who is purchasing the van and for how much and they'll invoice to the purchaser directly. (I think they have to invoice it as the vehicle owner, but this may vary from lease company to lease company.)