Are Second hand or used goods subject to VAT

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Hi I'm still a little with this forum ( due entirely to my own ignorance) but I'm sure I'll get there in the end .
I have been trying to find out for some time, if second hand or used goods are subject to VAT. I buy a lot of stuff from a particular car breakers and i always get charged VAT @ 17.1/2 %. Am I wrong in thinking that second hand merchandise was not subject to VAT.
Thanks biggrin

oldnick

The scrap dealer is totaly correct in charging you VAT.

Most second hand goods are subject to VAT if they would have been subject to VAT if new.

I do agree though that it is one of the governments great tax frauds. Basically if you sell anything at a profit, the Robber Baron wants his cut, and Gordon Brown is one of the greatest robbers of all time. I am quite sure that he spends hours trying to work out how he can tax the air that we breathe!

RayWolfe

Do you realise you are getting sillier and sillier? VAT was introduced by a Tory government and not only retained but increased from 8% to 17.5% by Mrs Thatcher's government.
Let's try very hard to keep politics out of money saving.

derrick

RayWolfe wrote: »

Do you realise you are getting sillier and sillier? VAT was introduced by a Tory government and not only retained but increased from 8% to 17.5% by Mrs Thatcher's government.
Let's try very hard to keep politics out of money saving.

If I remember correctly, VAT just replaced purchase tax?, to bring us into line with Europe prior to us joining the Common Market,(as it was called then). so just one tax for another .

Maybe we would not be taxed as much as we are if we stopped giving away taxpayers money in the guise of International aid, our money should stay here, and charities set up for people to pay extra if they want to for other countries, as far as I am concerned we are having our money stolen by government then it is being given away to other countries, this should stop.
I know this will not sit well with some, but it is my opinion and we are all entitled to that.

By the way, does anyone know what is happening to the billions we are now not paying to America per year for the war debt, I believe the final payment was made a couple of months ago?

Hugh_Jampton_2

So effectively the VAT on that item has been paid on that item twice.

No wonder you don't see many VAT registered junk shops, everything is 17.5% dearer

derrick

Hugh_Jampton wrote: »

So effectively the VAT on that item has been paid on that item twice.

No wonder you don't see many VAT registered junk shops, everything is 17.5% dearer

As I understand it, all the VAT registered retailers claim back the VAT, so it is only Joe Public who actually pays it, so it will only be paid once to the exchequer ?

RayWolfe

If goods are sold new they attract tax. If they are sold again they attract tax. If you are not VAT registered and you buy the same thing twice (and why would you?) you will pay tax twice.
If you are a dealer and you sales are not over the VAT threshold, you can sell without VAT but you cannot reclaim your input tax.

exil

VAT on second hand goods is based on the "value added" by the trader. That is, his profit margin/overheads only. Eg

New car - 10,000.
VAT - 1,750

you sell it to retailer for 5,000

he sells it on at 6,000

VAT is paid on 6,000-5,000 = 1,000, VAT due is 175. If the trader has to sell at a loss there is no VAT due.

The main impact on businesses is the red tape associated with the tax, though there is presumably an overall impact on sales when VAT is increased.

BTW international aid is a very small proportion of govt spending - about 1% AFAIK.

RayWolfe

exil wrote: »

BTW international aid is a very small proportion of govt spending - about 1% AFAIK.

Close! 0.7% last time I heard and if we can't afford to give this to impoverished people in other parts of the world ... god help us!

JasonLVC

Derrick is correct in saying VAT was introduced when we joined the Common Market - nothing to do with Thatcher!.

Germany has just raised the VAT rate by 3% from January 2007 and Ireland is around 21% already - so the VAT rate in the UK is fairly low. We also have reduced rate for fuel (5%) and zero rate (0%) for food, magazines and clothing - and zero rate does not exist anywhere else in the EU and so very soon that rate will go if we join the Brussels brigade fully and watch as kiddy clothes and cakes go up by 17.5%.

OP - everything that had VAT when sold originally will have VAT when sold second hand. That means, most things and certainly will be everything in relation to a car or car parts. As junk dealers deal mainly in cash they tend to skim the tills thus declaring less tax to the taxman (ie, "we only sold three wing mirros today for £20 - despite selling about £2 grand of stuff!), which is why you never see a poor car breaker!.

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Thanks Everyone, for your very interesting comments. at least now I know for certain, I won't feel quite as bad at my next purchase.