Accounting for a backwards deal on the books?

[Huggins 17]

Excuse the stupid question - I've got a serious case of brain fade!

 

Correct way to account for a backwards deal? my car SIV at 5k including my reconditioning costs etc for retail at 6k customers car worth 7k so did the deal and 1k to the customer.

 

Paid VAT  last quarter on the profit from the deal on "my car " i.e 1k

 

Do I stand the unsold backwards stock car at 5k + 1k  or 6k+ 1k?

 

Thanks for any help 

[Mark101 536]

48 minutes ago, Huggins said:

Excuse the stupid question - I've got a serious case of brain fade!

 

Correct way to account for a backwards deal? my car SIV at 5k including my reconditioning costs etc for retail at 6k customers car worth 7k so did the deal and 1k to the customer.

 

Paid VAT  last quarter on the profit from the deal on "my car " i.e 1k

 

Do I stand the unsold backwards stock car at 5k + 1k  or 6k+ 1k?

 

Thanks for any help 

I don't really understand your question but you don't use SIV to calculate VAT margin anyway.

What did you actually pay for car 1 excluding recon. I.e. hammer price + fees or private price (if not an auction car). Then subtract this from your gross selling price and use that figure to calculate VAT.

The PX is irrelevant and you need to calculate VAT margin on that in excatly the same way. What you sell it for less what you allowed for it when PX'd.

Recon cannot be included in margin scheme.

[David Ayers 171]

52 minutes ago, Huggins said:

Excuse the stupid question - I've got a serious case of brain fade!

 

Correct way to account for a backwards deal? my car SIV at 5k including my reconditioning costs etc for retail at 6k customers car worth 7k so did the deal and 1k to the customer.

 

Paid VAT  last quarter on the profit from the deal on "my car " i.e 1k

 

Do I stand the unsold backwards stock car at 5k + 1k  or 6k+ 1k?

 

Thanks for any help 

Whatever is says on the invoice!

[Mark101 536]

53 minutes ago, Huggins said:

Do I stand the unsold backwards stock car at 5k + 1k  or 6k+ 1k?

You "stand" the unsold car at whatever you allowed for it, so £7k.

[AAM90 22]

9 minutes ago, Mark101 said:

What did you actually pay for car 1 excluding recon. I.e. hammer price + fees or private price (if not an auction car). Then subtract this from your gross selling price and use that figure to calculate VAT.

The PX is irrelevant and you need to calculate VAT margin on that in excatly the same way. What you sell it for less what you allowed for it when PX'd.

Recon cannot be included in margin scheme.

Exactly this. 

I hope the OP hasn't been including re con in the purchase price to calculate VAT? We get the VAT back on recon costs!

[Casper 272]

Original Car cost you 5k 

as aam said claim vat back on recon costs separate for parts purchased 

same with px car costs 7k any recon costs separate 

basically the way mark101 has put it and probably worded it better than me 

[CRW 73]

Personally I would have sold him the car, invoiced with no part exchange.  Then I would have requested a purchase invoice from the customer for £7k.  Has the same effect in the accounts and is a tidier way to do things.  Or maybe that's just a Cornish Hill Billy way to do things!

 

[Casper 272]

30 minutes ago, CRW said:

Personally I would have sold him the car, invoiced with no part exchange.  Then I would have requested a purchase invoice from the customer for £7k.  Has the same effect in the accounts and is a tidier way to do things.  Or maybe that's just a Cornish Hill Billy way to do things!

 

Sounds like a good idea to me .  

[Huggins 17]

Thanks for the all the replies - I think I was getting myself more and more confused looking at it with a tired brain! And i've been paying VAT on purchase to sales price - excl .recon ... unfortunately!