Selling Vans...VAT explaination?

[grant8064 219]

Hey all, 

So currently we just sell cars which is pretty straightforward but we fancy trying a few vans on the forecourt.

So, hypothetically, we buy a van from auction and pay £600 VAT on the purchase price of £3000 . We then offer the van for sale at 5000 + 1000 VAT on the sale price?

So how does the maths add up as we have taken £400 extra in VAT...does the VAT basically always get repaid to the Gov whatever the amount on each transaction? In other words is the total of VAT irrespective of the bottom line once sold?

...apologies if this is a school boy question but I had to ask!

 

[Phil H 124]

you pay 20% vat on the retail price and 20% on the purchase price so on based on your figures the £600 on vat on the purchase price would be accounted for in the amount reclaimed by you and the £1000 vat on the sale would be accounted for in the vat due on sales amount, however quite a lot of ex lease vans are vat qualifying, especially crew vans which are sold as vat qualifying

[betginge 73]

1st Question are you Vat Registered ?

If Yes Surely You're Using The Margin Scheme, So You Would Worry me slightly that you're unsure how vat would work on commercial vehicles. It's a lot more simple with vans, If you pay vat when purchasing you sell with vat. Only trick is when buying from private or tradesperson, You need to find out their status with vat and if they paid it when they Bought it. 

 

 

 

[Phil H 124]

It's amazing how many margin vat dealers get confused when selling commercials, a dealer who I know used to pay commercial vat and margin vat on any commercial that he sold, when I told him he was doing it wrong he didn't believe me and said that's how his accountant told him to do it.