New Trader help!

[HuwD 1]

Hi all,

After some help if possible. New to the trade and needing to be VAT registered. In the instance of purchasing cars, how would I register vehicles that have been bought within the trade from VAT registered dealers into the VAT margin scheme? 

I have been purchasing from main franchise dealers largely for resale, and on purchase invoice sometimes it deducts VAT and others it does not which would obviously separate those which will reclaim and will claim on margin scheme.

Is it possible for those that reclaim VAT as shows a split in invoice to be registered under the margin scheme or would full VAT be payable?

Any advice appreciated, thanks all

 

 

 

[Rory RSC 596]

All cars are vat margin unless its a vat qualifying car.

 

You still pay margin even if you buy a car from a private punter thats not vat registered. 

[David Horgan 564]

1 hour ago, HuwD said:

Hi all,

After some help if possible. New to the trade and needing to be VAT registered. In the instance of purchasing cars, how would I register vehicles that have been bought within the trade from VAT registered dealers into the VAT margin scheme? 

I have been purchasing from main franchise dealers largely for resale, and on purchase invoice sometimes it deducts VAT and others it does not which would obviously separate those which will reclaim and will claim on margin scheme.

Is it possible for those that reclaim VAT as shows a split in invoice to be registered under the margin scheme or would full VAT be payable?

Any advice appreciated, thanks all

 

 

 

As Rory says 

All used cars are Margin VAT when sold , 

Two types of purchase exist when you buy the car from a dealer . 

1 Its sold as a margin car so you don't and cant claim VAT on THE PURCHASE. 

2 Its VAT Qualifying car you purchased , eg some bought it for business purposes and will show a VAT element on your invoice . You still don't claim VAT 

Either way you dont claim any VAT and sell the cars as a normal sale .

If you get a VAT qualifying car and another business wants to buy it , you can show the VAT element on your invoice to the customer so he can claim it back . That only happens on VAT qualifying stock . NOT Margin Stock 

Any car can be sold on the Margin system . even VAT Qualifying cars . 

This is where it is at mostly . 

So you buy a car for £5,000 , Sell said car for £5,100 = Gross profit of £100 Minus margin VAT at 20% leaves you £83.33 net profit after Margin Vat 

But you do claim VAT on any service parts , for that car which offsets the Margin VAT . 

I hope you make a little more than the example of £100 by the way .

It does change with VANS as mostly they are sold on commercial basis which attracts a price + VAT when advertised unlike cars .

If a van is not commercial eg bought by a none registered VAT customer when new , then it reverts to MARGIN sale as per cars when sold used .

 

Hope that helps . 

 

[HuwD 1]

Amazing. Thank you both so much. Accountant seems to be struggling with the volume I'm looking at trading with etc so the correct advice is invaluable.

[justina3 518]

5 hours ago, HuwD said:

Amazing. Thank you both so much. Accountant seems to be struggling with the volume I'm looking at trading with etc so the correct advice is invaluable.

In that case change accountants earlier rather than later save yourself a load of headache and possible surcharges 

[Mikey360 68]

1 hour ago, justina3 said:

In that case change accountants earlier rather than later save yourself a load of headache and possible surcharges 

+1, get an accountant that has knowledge of motor trade, don't skimp out on a good accountant!

[Frank Cannon 812]

17 hours ago, David Horgan said:

As Rory says 

All used cars are Margin VAT when sold , 

Two types of purchase exist when you buy the car from a dealer . 

1 Its sold as a margin car so you don't and cant claim VAT on THE PURCHASE. 

2 Its VAT Qualifying car you purchased , eg some bought it for business purposes and will show a VAT element on your invoice . You still don't claim VAT 

Either way you dont claim any VAT and sell the cars as a normal sale .

If you get a VAT qualifying car and another business wants to buy it , you can show the VAT element on your invoice to the customer so he can claim it back . That only happens on VAT qualifying stock . NOT Margin Stock 

Any car can be sold on the Margin system . even VAT Qualifying cars . 

This is where it is at mostly . 

So you buy a car for £5,000 , Sell said car for £5,100 = Gross profit of £100 Minus margin VAT at 20% leaves you £83.33 net profit after Margin Vat 

But you do claim VAT on any service parts , for that car which offsets the Margin VAT . 

I hope you make a little more than the example of £100 by the way .

It does change with VANS as mostly they are sold on commercial basis which attracts a price + VAT when advertised unlike cars .

If a van is not commercial eg bought by a none registered VAT customer when new , then it reverts to MARGIN sale as per cars when sold used .

 

Hope that helps . 

 

That's the clearest explanation I've ever seen

[MattR 177]

23 hours ago, HuwD said:

Amazing. Thank you both so much. Accountant seems to be struggling with the volume I'm looking at trading with etc so the correct advice is invaluable.

You definitely need to find an accountant who knows what is going on with margin scheme as with cars it will make up 99.9% of your business. As said above, better to make an early swap than find out a year down the line he cant cope with it. 

And if youre doing your own accounts data inputting, make sure you have margin compatible software.

[Scooby who 41]

On 6/24/2021 at 12:47 PM, David Horgan said:

 

Any car can be sold on the Margin system . even VAT Qualifying cars . 

 

 

 

 

This I need explained 

[David Horgan 564]

10 hours ago, Scooby who said:

This I need explained 

You can buy cars that are VAT qualifying eg bought from new by a VAT registered businesses so VAT was claimed on the new car purchase , 

When said car is then sold 2/3 years on it still can be VAT qualifying , so another VAT registered business could buy that car or it qualifies for VAT reclaim on export too. 

BUT if Mr Private who is not VAT registered buys that car when its a used car , then it becomes a Margin VAT sale , Eg the VAT element is within the gross profit from that sale and then the car is no longer ever a VAT qualifying car . 

If when new that same car was sold to Mr Private who we know is not VAT registered , then that car will never be VAT qualifying at all ever . 

 

Is that what you wanted explaining Scooby ? 

 

[Scooby who 41]

12 hours ago, David Horgan said:

You can buy cars that are VAT qualifying eg bought from new by a VAT registered businesses so VAT was claimed on the new car purchase , 

When said car is then sold 2/3 years on it still can be VAT qualifying , so another VAT registered business could buy that car or it qualifies for VAT reclaim on export too. 

BUT if Mr Private who is not VAT registered buys that car when its a used car , then it becomes a Margin VAT sale , Eg the VAT element is within the gross profit from that sale and then the car is no longer ever a VAT qualifying car . 

If when new that same car was sold to Mr Private who we know is not VAT registered , then that car will never be VAT qualifying at all ever . 

 

Is that what you wanted explaining Scooby ? 

 

 

Thanks David. yes well explained and something I was aware off.

 

Just thought I'd missed out on something from meetings with my accountant. I have a tendency to listen attentively to sentences containing the word profit(s), get alarmed at any sentence containing the word(s) loss, and generally just day dream through the rest 

[David Horgan 564]

On 7/15/2021 at 10:05 PM, Scooby who said:

Just thought I'd missed out on something from meetings with my accountant. I have a tendency to listen attentively to sentences containing the word profit(s), get alarmed at any sentence containing the word(s) loss, and generally just day dream through the rest 

best to dream through any thing accounts tell you , they are totally useless at running a business 

The times accountants have told me i haven't earned anything , your losing money they say , I just think my god your stupid , you have no idea whats in the pipeline coming in as payments . If it was that easy to pick up a few papers and a book and advise how to earn money everyone would be made . 

They are just able to put everything into HMRC without any effort from me , just leave me alone to earn a profit to pay wages including the accountant's and the HMRC guys too, who both think they know where profits come from but in reality wouldn't be able to survive