A VAT Question

kev.s

Can someone answer this?

I'm looking to purchase a van (for personal use, i'm not a company etc) and i have been looking at various dealers etc. Questionn is: 1 dealer has 2 vans, same age, same miles, price difference approx £300 but 1 is +vat and one is no VAT, if 1 is +VAT, should they not be both +VAT? just curious as to how this works.

Quentin

It depends on the VAT status of the previous owner of a van.

If they were VAT registered, then the dealer will be selling it + VAT.

If the previous owner wasn't VAT registered, then the dealer won't need to add VAT.

kev.s

Quentin wrote: »

It depends on the VAT status of the previous owner of a van.

If they were VAT registered, then the dealer will be selling it + VAT.

If the previous owner wasn't VAT registered, then the dealer won't need to add VAT.

oh i see, that simple? every day's a school day

nikki1520

Not quite the case- if the dealer is vat registered it should always be +VAT on a van which is a commercial vehicle. You cannot account for a commercial vehicle under the second hand margin scheme.

Are they both classed as vans?

John_Pierpoint

I go from time to time to auction sales, where assets of farmers/builders/other small traders, are flogged off.
The items are usually starred as +VAT or not +VAT.
Is it possible that this second hand van could be flogged on a commission basis, with the second hand van salesman charging the seller a fee (plus VAT) rathe than charging the customer VAT on the full wack?

DCodd

nikki1520 wrote: »

Not quite the case- if the dealer is vat registered it should always be +VAT on a van which is a commercial vehicle. You cannot account for a commercial vehicle under the second hand margin scheme.

Are they both classed as vans?

Not so sure about that. my understanding is that some vehicles are VAT qualifying and some are not. If the VAT was claimed back on the van at the point of sale when new, then it is vat qualifying and the vat on the secondhand sale can be claimed but if the inital sale did not have the vat claimed, then it is not vat qualifying and can not be claimed.

Hence the vehicle with "+VAT" identifies a VAT qualifying vehicle and one without "+VAT" means it is not a vat qualifying vehicle.

The dealer can use the Margin Scheme to limit their VAT liability if there vehicle was purchased without VAT i.e. from a private seller.
http://www.hmrc.gov.uk/vat/sectors/motors/selling-cars.htm

A similar thing applies to VAns.

kev.s

nikki1520 wrote: »

Not quite the case- if the dealer is vat registered it should always be +VAT on a van which is a commercial vehicle. You cannot account for a commercial vehicle under the second hand margin scheme.

Are they both classed as vans?

yup, both transits.. a van is a van as i see it... no seats etc in rear..

the plot thickens:D

chrismac1

"A van is a van"

Not in the wacky world of HMRC! The actual tax definition of what a commercial vehicle is runs to several paragraphs and trips many folk up.

JasonLVC

For the purposes of the 2nd hand margin scheme for dealers, both a car and a van (Commercial vehicle) are eligible for the scheme.

As other posters have stated, when the dealer buys in a vehicle from a non-VAT registered seller then there is no VAT charged when the dealer acquires the vehicle, subsequently, when the dealer sells the car, he will charge VAT but not show this VAT seperate on the invoice/ticket price.

This is becuase he will only charge VAT on the margin (difference between cost of buying the 2nd hand van and the price it is sold at), if he had to show the sale VAT seperate you'd be able to see his margin, which isn't very sporting.

If the dealer acquires a vehicle from a VAT regisered seller then the seller will charge VAT on the sale (if a van yes, maybe not the case if a car), the dealer cannot sell this vehicle via the 2nd hand margin scheme as he's been charged VAT, and so the dealer must sell this vehicle the normal way, by charging VAT on the ticket price/showing VAT on the invoice.

If you're VAT registered (or soon to be), then clearly the van with VAT charged on it means you can reclaim this VAT back on your own VAT return, this may make the van a cheaper buy, however, the other van, which is not showing a AVT charge may still be the better buy in terms of reliability, age, etc.

You'll need to do the math as they say to see which one is the better deal, to recap, the van with VAT you can reclaim this VAT and so the real cost to you is the ex-vat price. The VAT with no VAT shwoing is the real cost already to you in buying the van.