VAT again , Sorry

[DBDlloyds 18]

Hi guys,

another question with ref to VAT if someone would be kind enough to answer it. I remember seeing a thread on here when I started a few months ago but cant find it now.

It looks as if i to am going to need to register for VAT at some point. 

This is my understanding of how it works, I would appreciate any comments to clarify my understanding is correct.

Buy Car at £1250 - Spend £200 on prep - Sell for £1900 

Now the question is do I pay the VAT on the £650 Gross profit or the £450 Nett

So either £108 on the Gross or £75 on the Nett. Either way it sure eats into your profits.

Your comments would be very welcome,

Regards Dean.

[BHM 994]

Yep, gross. 

And when you buy a shitter, spend more money putting it right than it's worth, sell it at a loss & the VAT man still wants his pound of flesh.

[DBDlloyds 18]

Thanks for your replies guys... as I thought, certainly makes an industry thats hard enough to make a living out of harder...

I now understand the feedback I got when I posted about wanting to be a trader and what I thought were negative comments at the time.

Still onwards and upwards as they say,

Thanks again

[jimreidvehicle 255]

Hi Dean

Margin VAT is payable on the margin between the buying price and the selling price always. So on the example given you would pay £108.33 vat. However you can recover the VAT spent on the reconditioning costs as long as the are vat recoverable , eg MOT normally have no vat.

With regards to 'it eats away at your profit' ................Welcome to our world!!!  

Jim

 

[DBDlloyds 18]

Cheers Jim, 

Thanks for the reply, yes it is a minefield that as a relative novice of a few months you don't really discover until you are living it...

Having said all of that I am still committed to making it work and having this forum to read about other traders challenges has really helped to educate me.

At 49 years old I have to be the old dog learning new tricks ha ha.

Have a great day. 

[justina3 518]

With the ever changing world of cars and there faults customers and there rights, trading standards and there often mind boggling way of looking at things advertising media changing daily, I think most of us would call ourselves novices.

 

 

[trade vet 704]

VAT,I recall reading a Bernie Ecclestone biography,he was a trader/ retailer . When VAT it was introduced in 73,he got out,I think he said It would kill the profitability of his business.......I wonder how he got on afterwards ?