Flat Rate Vat - replacing van.

deejaybee

Hi all,

I am a self-employed courier, and have been on the Flat Rate VAT scheme for a few years now.

I submit returns quarterly,and pay by D/D.

The last time i changed van,i bought privately from an individual, so no VAT involved.

Possibly replacing it during current tax year,  i assume if i have to pay VAT this time, i can account for that on relevant quarterly submission, and the form will auto-subtract it from balance owed ?   If the VAT amount on Van is greater than the amount i would have been paying normally, would they pay the difference to me via my normal D/D date, or carry it over to the next quarterly submission ?

Ta

Pennywise

Can I just check that you realise you have to account for output VAT on the previous vans you've sold even if you didn't pay VAT on them when you bought them?  You should have raised invoices with VAT charged just like your other sales.
To your main point, if input VAT exceed output VAT, you'll get a refund - it's not carried over to future quarters.

deejaybee

Hi Pennywise, no i didnt realise that to be honest !  The previous van was basically scrap and was taken off my hands for just over £100 anyway..

I dont actually do any sales, work in Gig Economy for a single company who are authorised to " self-invoice"  so pay me 20% VAT on top of my " normal " payments.

Thank you for clarifying the point about refunds .

Jeremy535897

Pennywise said:

Can I just check that you realise you have to account for output VAT on the previous vans you've sold even if you didn't pay VAT on them when you bought them?  You should have raised invoices with VAT charged just like your other sales.
To your main point, if input VAT exceed output VAT, you'll get a refund - it's not carried over to future quarters.

I will confess now that I know nothing about flat rate VAT schemes, but I assume this issue about accounting for VAT on the sale of the old van is because the flat rate scheme is used? Under normal VAT rules, you do not charge VAT on vehicles if you claimed no input tax on their acquisition, unless you sell them at a profit:
https://www.gov.uk/guidance/the-margin-scheme-on-second-hand-cars-and-other-vehicles-vat-notice-7181

whizzywoo

You can reclaim the input VAT on capital expenditure when on a Flat Rate Scheme as long as the Capital Item costs more than £2,000.  More information here:
https://www.gov.uk/government/publications/vat-notice-733-flat-rate-scheme-for-small-businesses/vat-notice-733-flat-rate-scheme-for-small-businesses#reclaim-of-vat-on-capital-expenditure-goods

deejaybee

Ah yeah whizzywoo, the £2K figure definitely rings a bell, i had forgotten about that...

Pennywise

Jeremy535897 said:

Pennywise said:

Can I just check that you realise you have to account for output VAT on the previous vans you've sold even if you didn't pay VAT on them when you bought them?  You should have raised invoices with VAT charged just like your other sales.
To your main point, if input VAT exceed output VAT, you'll get a refund - it's not carried over to future quarters.

I will confess now that I know nothing about flat rate VAT schemes, but I assume this issue about accounting for VAT on the sale of the old van is because the flat rate scheme is used? Under normal VAT rules, you do not charge VAT on vehicles if you claimed no input tax on their acquisition, unless you sell them at a profit:
https://www.gov.uk/guidance/the-margin-scheme-on-second-hand-cars-and-other-vehicles-vat-notice-7181

That's for where you buy goods with the purpose of re-selling them, i.e. a car dealer.  It doesn't apply where you've bought a vehicle to use it yourself and then sell on at a much later date after use.

Jeremy535897

Pennywise said:

Jeremy535897 said:

Pennywise said:

Can I just check that you realise you have to account for output VAT on the previous vans you've sold even if you didn't pay VAT on them when you bought them?  You should have raised invoices with VAT charged just like your other sales.
To your main point, if input VAT exceed output VAT, you'll get a refund - it's not carried over to future quarters.

I will confess now that I know nothing about flat rate VAT schemes, but I assume this issue about accounting for VAT on the sale of the old van is because the flat rate scheme is used? Under normal VAT rules, you do not charge VAT on vehicles if you claimed no input tax on their acquisition, unless you sell them at a profit:
https://www.gov.uk/guidance/the-margin-scheme-on-second-hand-cars-and-other-vehicles-vat-notice-7181

That's for where you buy goods with the purpose of re-selling them, i.e. a car dealer.  It doesn't apply where you've bought a vehicle to use it yourself and then sell on at a much later date after use.

Are you sure? I couldn't see anything that says that. These accountants don't seem to think it's limited in that way?
https://www.krwaccountants.co.uk/krw-news/krw-q-a/item/when-do-i-have-to-declare-vat-on-the-sale-of-an-asset.html

whizzywoo

Jeremy535897 said:

Pennywise said:

Jeremy535897 said:

Pennywise said:

Can I just check that you realise you have to account for output VAT on the previous vans you've sold even if you didn't pay VAT on them when you bought them?  You should have raised invoices with VAT charged just like your other sales.
To your main point, if input VAT exceed output VAT, you'll get a refund - it's not carried over to future quarters.

I will confess now that I know nothing about flat rate VAT schemes, but I assume this issue about accounting for VAT on the sale of the old van is because the flat rate scheme is used? Under normal VAT rules, you do not charge VAT on vehicles if you claimed no input tax on their acquisition, unless you sell them at a profit:
https://www.gov.uk/guidance/the-margin-scheme-on-second-hand-cars-and-other-vehicles-vat-notice-7181

That's for where you buy goods with the purpose of re-selling them, i.e. a car dealer.  It doesn't apply where you've bought a vehicle to use it yourself and then sell on at a much later date after use.

Are you sure? I couldn't see anything that says that. These accountants don't seem to think it's limited in that way?
https://www.krwaccountants.co.uk/krw-news/krw-q-a/item/when-do-i-have-to-declare-vat-on-the-sale-of-an-asset.html

The Flat Rate scheme makes the sale of assets slightly different.  The way HMRC set out the requirements is quite difficult to follow but following the link supplied by @Jeremy535897 it is set out as follows which easier to follow:
"What about Flat Rate VAT?
Businesses registered for the flat rate scheme are able to recover VAT on the purchase of assets where the total (VAT inclusive) purchase price exceeds £2,000. For the onward sale of such assets VAT must be charged and paid over in full to HM Revenue & Customs, rather than applying the flat rate percentage to the gross sale proceeds.

However, where no VAT has been recovered on the purchase of the assets, for example where they cost less than £2,000, then VAT must usually be charged on their onward sale, but in this case you only have to pay over the relevant flat rate percentage of the gross sale proceeds.

A quirk to the flat rate scheme is that it captures all business income unless it is outside the scope of VAT. As a result, flat rate VAT would be payable on the sale of a car that had been used in the business, even where the VAT on its purchase was blocked due to there being a private use element (as established earlier in this article). So in this case no VAT is charged on the sale of the car as it is VAT exempt due to the input tax block, but exempt sales are included in the flat rate calculation."