i am a bit confused regarding vat

billysmum

Hi, i am currently self employed selling secondhand parts, but i was thinking of selling new parts as well, i have located a wholesaler, but here is where i am confused, do the wholesaler charge vat on top of their trade price, if so do we sell it on as the total price paid plus profit or if they dont charge vat do we have to add this on? , sorry i sound really thick

richt71

Any vat registerd business has to sell goods + vat (on a reciept it'll be listed as purchase price + vat @ 17.5%). If you are vat registered you too will have to sell all goods + vat. If you're not registered you can't add vat on but obviously you can sell at whatever price you wish.

Hope that helps?

dellboy102

sorry to jump in, but if the business has been charged VAT on its stock which it brought to sell, can it still reclaim the VAT its been charged?

mikewebs

You can only reclaim the VAT on stock purchases if you are registered for VAT and also your goods sold are not VAT exempt - ie you could not claim back VAT on paper bought for Insurance Policy documents (I think)

Lifeisbutadream

You can only claim back VAT if you are VAT registered.

For example:

Say you bought something at a trade price of £10 and wanted to sell it on at £15:

IF YOU ARE NOT VAT REGISTERED:

Buy price: £10+VAT = £11.75
Sell Price: £15

You make £3.25 profit
NO VAT TO PAY, NON TO CLAIM BACK.

IF YOU ARE VAT REGISTERED:

Buy price: £10+VAT = £11.75
Sell price: £15 (inclusive of VAT)

You can claim back: £1.75 VAT
You have to pay: £2.23 VAT (£15-100/(100+17.5)x£15)

You make £4.52 profit

If you are only selling goods (as opposed to a 'service') and you are able to get a VAT invoice for the goods that you buy, then it is probably worth going VAT registered, as you are also able to reclaim VAT on anything else you buy for your business (such as vehicles, computers, fuel)

VAT can be quite complicated, but I have set up several spreadsheets to help me out, including a 'VAT converter' which automatically works out the VAT to add, or the VAT included. I think you can buy computer programmes that can do that for you. I find it quite straightforward now and we have only been VAT registered for 5 months.

fighting_chaos

Whilst we are on the subject of VAT, do you pay VAT on vehicle tax, and if so, does that mean that (providing you are VAT registered) you can claim it back?

Lifeisbutadream

fighting_chaos wrote: »

Whilst we are on the subject of VAT, do you pay VAT on vehicle tax, and if so, does that mean that (providing you are VAT registered) you can claim it back?

I dont think so - I have not claimed back on vehicle tax, but I do not know for certain.

fighting_chaos

Thanks, I thought that was the case but I just wanted to check.

mikewebs

No there is no VAT on Vehicle Excise License (It's a tax in itself)

fighting_chaos

Sorry, I realise now that it was stupid question, of course its already a tax. My brain seems to go to mush very time tax or VAT is mentioned!