why is betting VAT exempt

Really2

terryw wrote: »

The point that I was trying to make is that the VAT is only charged on the profit element and not on the total sale price.

No, I have purchased second hand recently and I am sure it was at full rate. (otherwise you could check how much they were making on you.:))

But then checking we are both right.:)
http://www.thisismoney.co.uk/bargains-and-rip-offs/ask-an-expert/article.html?in_article_id=441026&in_page_id=513

So if they sell new also I would say they add vat in full (as that is how their accounts are set up)
If second hand only they would account for vat how you described.

terryw

Really2 wrote: »

No, I have purchased second hand recently and I am sure it was at full rate. (otherwise you could check how much they were making on you.:))

But then checking we are both right.:)
http://www.thisismoney.co.uk/bargains-and-rip-offs/ask-an-expert/article.html?in_article_id=441026&in_page_id=513

So if they sell new also I would say they add vat in full (as that is how their accounts are set up)
If second hand only they would account for vat how you described.

The only point that I am trying to make is that dealers in second-hand cars only pay VAT on the gross difference between the buying price and the selling price and not on the selling price . So as regards the potential for the government charging VAT on betting, there is a precedent for only charging VAT on the gross profit element of the bet.

A customer buying a car on which the dealer has paid the VAT on the gross profit is under no obligation to inform the customer of the VAT paid and this can't be claimed against the customer's VAT bill.

JasonLVC

There's the ordinary VAT accounting scheme which is quote popular, but then, theres the 2nd hand margin scheme which many dealers favour.

But which is best?


In fairness terryw, you are quite correct, the 2nd hand margin scheme for second hand goods does charge VAT on the difference (or the margin) between the purchase and the selling price - but is a specialist scheme for business which trade in 2nd hand goods.

My reference to VAT not being interested in profit, in hindsight, really should have clarified this but I didn't want to complicate matters as in the context of the gaming industry their transactions will be exempt and so they are not permitted to register for VAT anyway.

Really2

terryw wrote: »

The only point that I am trying to make is that dealers in second-hand cars only pay VAT on the gross difference between the buying price and the selling price and not on the selling price . So as regards the potential for the government charging VAT on betting, there is a precedent for only charging VAT on the gross profit element of the bet.

A customer buying a car on which the dealer has paid the VAT on the gross profit is under no obligation to inform the customer of the VAT paid and this can't be claimed against the customer's VAT bill.

Sorry Terry, after never seeing it (only buying main dealer) I had never seen it TBH.

But you are quiet right (and that is why I linked to it) and I understood your point from there.

terryw

As a slight aside to this thread and purely for information.

Bookies' shops sell small amounts of refreshments and obviously they charge Output VAT on these. But they can set all the Input VAT on, for example satellite TV, printing, etc against the Output VAT due so effectively they receive a VAT refund.

The above may have changed in recent years , I honestly don't know. But about ten years ago (before the advent of the dreaded gambling machines) this small concession made the difference between profit and loss to small "hole in the wall" shops.

ninky_2

Really2 wrote: »

Such as? No goods are sent via gambling so what other things are you thinking of?

music, movie downloads, paid for software. that sort of thing.

i'm pretty sure i get charged VAT on itunes. could be wrong though.

ninky_2

so how come they charge the VAT equivalent in other countries? for example according to this australia charges GST on betting. they must have the same internet / offshore issues. generali you might know more about this?

http://www.ato.gov.au/businesses/content.asp?doc=/content/11991.htm

zappahey

Really2 wrote: »

It used to be 9% and you could pay before or from winnings (before made sense)

<Thread drift>

I never understood why people thought it made more sense to pay the tax up front, as the effect is exactly the same. It seems to be based on a fixation with the cash amount being handed over, ignoring the fact that if the tax was used as the stake then the overall outcome would be identical.

JasonLVC

terryw wrote: »

As a slight aside to this thread and purely for information.

Bookies' shops sell small amounts of refreshments and obviously they charge Output VAT on these. But they can set all the Input VAT on, for example satellite TV, printing, etc against the Output VAT due so effectively they receive a VAT refund.

The above may have changed in recent years , I honestly don't know. But about ten years ago (before the advent of the dreaded gambling machines) this small concession made the difference between profit and loss to small "hole in the wall" shops.

Those days are long gone terryw.

A partially exempt business (one which makes both exempt and VATable sales) has to perform a partial exemption calculation and depending upon certain conditions which I'll not go into for brevity sake, they'll only be able to reclaim a small proportion of their input tax, not all of it.

Used to work for dentists as well who make exempt supplies of healthcare (so not VAT recovery) but they'd sell £2.50 worth of toothbrushes and then try and say that this VAtable part of the business meant they could reclaim the VAT on the overheads of the business such as rent/gas, etc. Can't do that anymore and as recently as last year, the big optician firms have been losing in court as well.

(the eyesight test bit is done at the back of the shop in a tiny room whereas the taxable sales are done in the showroom which is gigantic but they cannot do this anymore either as the split between floor areas is unfair to HMRC). That's why those rooms are so small, it boosted their input tax recovery levels).

JasonLVC

ninky wrote: »

music, movie downloads, paid for software. that sort of thing.

i'm pretty sure i get charged VAT on itunes. could be wrong though.

Electronic downloads are standard rated supplies so VAT will be charged on downloading music from websites such as Amazon.

A book in printed form is zero rated, but if you buy the same book as an electronic download for your Kimble/Sony Reader, then it will be standard rated as you are not buying a book, you are buying electrnoic data.

Go figure?