VAT and van selling advice please
VAT and van selling advice please
Author
Discussion

_TC

Original Poster:

1,938 posts

279 months

Thursday 20th March 2008
quotequote all
Hi all, i have decided to sell my vans from my self drive hire business however as im not VAT reg. i stand to lose a fair amount just in VAT alone. Is there anything i can do to soften the blow?
My turnover was very low so not point in reg. for VAT.

Any help most appreciated.

Edward.

Eric Mc

125,793 posts

295 months

Thursday 20th March 2008
quotequote all
If you are not VAT registered, then you do not have to add VAT on to the sale price of the vans.

How do you come to the conclusion that you are "losing out" in some way?

_TC

Original Poster:

1,938 posts

279 months

Thursday 20th March 2008
quotequote all
Well on one van i paid £12k plus vat = £14k i wont be able to sell for 12 let alone 14k. another van i paid 7500 plus vat and sold recenlty for 7250 all in.
these vans have done less than 2000 miles i less than a year. i am losing the VAT you see or have i miss read it?

Eric Mc

125,793 posts

295 months

Thursday 20th March 2008
quotequote all
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.

DavidY

4,492 posts

314 months

Thursday 20th March 2008
quotequote all
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

Eric Mc

125,793 posts

295 months

Thursday 20th March 2008
quotequote all
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.

_TC

Original Poster:

1,938 posts

279 months

Thursday 20th March 2008
quotequote all
Thank you for the replies chaps, i have advertised the first van mentioned at a lesser fee than i paid ad made a big point about the NO VAT to draw in the private punter. i guess i am stuck with losing the VAT. Thanks anyway.

smartie

2,630 posts

303 months

Thursday 20th March 2008
quotequote all
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!

_TC

Original Poster:

1,938 posts

279 months

Thursday 20th March 2008
quotequote all
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.

smartie

2,630 posts

303 months

Thursday 20th March 2008
quotequote all
would registering be beneficial anyway, regardless of the vans?

_TC

Original Poster:

1,938 posts

279 months

Thursday 20th March 2008
quotequote all
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.

smartie

2,630 posts

303 months

Thursday 20th March 2008
quotequote all
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

??