johny1980

Registering for VAT

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Hi,

As a reminder, i set up as a part time LTD company back in July.

Things have been going well and if the same trends continues i will be on the borderline for VAT registering in Jul 21.

I could intentionally slow things down to stop me going over but have been weighing up the pros and cons.

What i do understand is that i can claim vat back on bills i have paid.

What i don't quite understand is how it works the other way round.

Do i have to pay VAT on all profit from sales + corporation tax.....

Essentially paying tax twice?

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4 hours ago, johny1980 said:

Do i have to pay VAT on all profit from sales + corporation tax.....

Essentially paying tax twice?

Yes and erm yes. 

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You pay Vat on the difference between the purchase price and sale price, irrespective of profit.

You can claim back the Vat on purchases.

 

 

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Let’s put it this way, if I were a part timer running very close to the VAT threshold I’d damn well make sure I didn’t go over it. 

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it is like having a  silent  partner taking 20% of everything while adding absolutely nothing to your business and contributes nothing in the slightest

 

apart from that paying VAT is great

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11 hours ago, Blenheim Car Sales said:

it is like having a  silent  partner taking 20% of everything while adding absolutely nothing to your business and contributes nothing in the slightest

 

apart from that paying VAT is great

Well, not quite, surely you are missing the whole point.

.... there is the satisfaction and lovely warm comfortable feeling, that you are one of those 'hard working families'. Earning and thereby, giving to the huge pot, that is the countrys tax account, to help keep this country and, its people going and, progressing to an exciting, bright, vibrant new future. 

Hard working families, schools, hard working families, hospitals, hard working families etc. 

 

 

 

 

 

 

 

 

Disclaimer: The views expressed here are generic and may not concurr with the authors. 

 

 

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11 hours ago, Blenheim Car Sales said:

it is like having a  silent  partner taking 20% of everything while adding absolutely nothing to your business and contributes nothing in the slightest

 

apart from that paying VAT is great

It’s not the VAT man sweating it out at the MOT station, or dealing with dickhead painters high on thinners, or stranded at the side of the motorway on a winter’s night driving back from the block when an engine suddenly lets go. Apart from that he’s welcome to his 20% :lol:

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On 12/16/2020 at 7:14 PM, David Ayers said:

You pay Vat on the difference between the purchase price and sale price, irrespective of profit.

You can claim back the Vat on purchases.

 

 

Thanks,

So i am guessing you can claim back VAT on purchases from other VAT registered businesses or auctions.

But, all of my car purchases are from 'Joe Public' so i am guessing i can't claim VAT back in that scenario?

On 12/17/2020 at 6:49 AM, Frank Cannon said:

Just speak to your accountant, simplesB)

On holiday until the new year but i will be cheers

On 12/17/2020 at 9:06 AM, BHM said:

Let’s put it this way, if I were a part timer running very close to the VAT threshold I’d damn well make sure I didn’t go over it. 

Yup starting to think that but i either 'stunt' growth or just go for lower value cars.

I am buying around 3k and selling for 4k at the moment on average so not sure id want to go any lower!

Edited by johny1980

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On non-qualifying used cars you pay margin VAT. If you buy a car for £3k and sell it for £4k you will pay 16.67% of the margin in VAT. So, for that car, the VAT man will relieve you of £167 of your profit. You will be able to claim VAT back on any prep work costs incurred on the car.

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2 hours ago, poor-trader said:

You will be able to claim VAT back on any prep work costs incurred on the car.

That come from a vat registered supplier. 

(obvious i know but you would be amazed how many people make this mistake) 

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And don’t forget if you loose money on a car- the VAT man is not involved!!!

ie you don’t get a VAT reduction on the loss. 

Not involved!!! 

Edited by sellect2
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There is one bonus to being VAT registered.... 

 

 

Said no one EVER

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On 12/16/2020 at 2:27 PM, johny1980 said:

I could intentionally slow things down to stop me going over but have been weighing up the pros and cons

This wouldn’t work I don’t think think. VAT registration isn’t done on a calendar year it’s on a rolling 12 month basis. So you would have to continually stay under the 86k mark on a rolling basis.

I think that’s how it works anyway - someone will correct me if I’m wrong!

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Isn’t it tax year to tax year (6th April - 5th April)? Tbh surely it’s academic to most cos unless you’re spreading it around every family member how on earth can you keep below?

Edited by BHM

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Its on a 12 month rolling basis.

Either turnover 85k or less or turnover 150k+

If you turnover inbetween you could be worse off or at best working the extra for pennies.

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On 12/19/2020 at 10:40 AM, sellect2 said:

And don’t forget if you loose money on a car- the VAT man is not involved!!!

ie you don’t get a VAT reduction on the loss. 

Not involved!!! 

This is one one rule that I have ever been able to come to terms with

The Tax man understands if you make a loss on a car it should be taken into account but the Vat man he's not interested

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On 12/20/2020 at 11:28 AM, BHM said:

Isn’t it tax year to tax year (6th April - 5th April)? Tbh surely it’s academic to most cos unless you’re spreading it around every family member how on earth can you keep below?

I am a part time trader remember and look like i will be hovering around the 85K mark in my first year of trading, although with things slowing down over xmas a little i should be ok this year if i continue to stock <4k cars.

To confirm is the VAT rate for car dealing 16.5%?

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I've a feeling that when/if/once this C19 is done and dusted, chasing VAT dodgers will be a savage sport and, probably sub'ed out from HMRC, to external bidders, on a fee per clawback principle...the sums would be worth it. 

With the crippling amount of debt being run up, to me it makes excellent business sense and, with every Tom, Dick, Ahmed and Domitri advertising on the Internet, can't be that hard to do, can it?

I do a HPI check now and, I get information on recent sales listings. 

Perhaps even an idea there for a TV series, 'Sold a motor, pay ya VAT or, we'll take it away'....obviously the title needs a bit of fettling though;)

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Posted (edited)
2 hours ago, johny1980 said:

To confirm is the VAT rate for car dealing 16.5%?

Its 20% VAT pal not 16.5% 

If your working on margin and want to see what VAT on  is say a £1000 profit its 1000 divided buy 1.2 = £833.33 so the VAT element is £166.67 on the deal , £166.70 goes to the VAT man , but all the service parts eg tyres , oil , plugs , and advertising VAT can be claimed back , eg you spent £300 +vat on parts advertising  and service you would claim back the £60 from those invoices , This is offset every quarter VAT return so the VAT element on that deal would be £106.70 to pay .

You can of course claim some fuel VAT , Stationary VAT , Tools VAT , Cleaning products VAT , in fact anything your business needs you claim back the VAT . You never win out but it does make you collect EVERY receipt to claim it back 

On 12/20/2020 at 11:28 AM, BHM said:

Isn’t it tax year to tax year (6th April - 5th April)? Tbh surely it’s academic to most cos unless you’re spreading it around every family member how on earth can you keep below?

Always made wonder that , If your doing 86k its not worth the hassle is it 

On 12/18/2020 at 9:46 AM, poor-trader said:

On non-qualifying used cars you pay margin VAT. If you buy a car for £3k and sell it for £4k you will pay 16.67% of the margin in VAT. So, for that car, the VAT man will relieve you of £167 of your profit. You will be able to claim VAT back on any prep work costs incurred on the car.

+1 /\

Edited by David Horgan

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2 minutes ago, Blenheim Car Sales said:

I recently had a 65" television for my  "waiting room" (;))....................... and claimed the VAT back on that, 100% business relevant expense

Trade Vet will be blowing a head gasket now:D

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2 hours ago, David Horgan said:

Its 20% VAT pal not 16.5% 

If your working on margin and want to see what VAT on  is say a £1000 profit its 1000 divided buy 1.2 = £833.33 so the VAT element is £166.67 on the deal , £166.70 goes to the VAT man , but all the service parts eg tyres , oil , plugs , and advertising VAT can be claimed back , eg you spent £300 +vat on parts advertising  and service you would claim back the £60 from those invoices , This is offset every quarter VAT return so the VAT element on that deal would be £106.70 to pay .

You can of course claim some fuel VAT , Stationary VAT , Tools VAT , Cleaning products VAT , in fact anything your business needs you claim back the VAT . You never win out but it does make you collect EVERY receipt to claim it back 

Always made wonder that , If your doing 86k its not worth the hassle is it 

+1 /\

Thanks so whats the difference between 'qualifying' and 'non qualifying' as there is examples of 20% and 16.67% there?

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Funnily enough so did I ...except mine was a more modest 55” ...because it’s quite a small room.....and I wouldn’t want to be seen as extravagant ....;)

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