Why do some second cars and plant machinery say VAT Payable?

midimanuser

Hi, I thought VAT was only charged on new vehicles and machines.  
Why do some ads say VAT payable? Does that mean you have to pay the VAT price from when it was purchased new? 

Surely the person or business paid the VAT when it was purchased new. 

paul_c123

The business would have paid the VAT and reclaimed it. When it comes time to sell, they need to also collect the VAT on that sale (at the secondhand price). 

Contrast with almost all private sales where they are not VAT registered so don't sell it + VAT (nor would have reclaimed it on purchase); or car dealers where the car would have been in the VAT Marginal scheme (dealer pays VAT on the difference between purchase price and sale price).

Mildly_Miffed

New cars have VAT paid on them.
If they're bought by a VAT reg business, for business use, the business reclaims the VAT - then charges it on the sale price.
This continues right up until the VAT isn't reclaimed on purchase, then it's never VAT-qualifying again.

For a non-business buyer, the difference is simply that you need to add 20% to the +VAT price. If it's still a good price, buy it. No difference to you.

For a business buyer, the difference is that they can reclaim that VAT, so it's effectively 17% cheaper than a non-VAT-qual vehicle.

midimanuser

Mildly_Miffed said:

New cars have VAT paid on them.
If they're bought by a VAT reg business, for business use, the business reclaims the VAT - then charges it on the sale price.
This continues right up until the VAT isn't reclaimed on purchase, then it's never VAT-qualifying again.

For a non-business buyer, the difference is simply that you need to add 20% to the +VAT price. If it's still a good price, buy it. No difference to you.

For a business buyer, the difference is that they can reclaim that VAT, so it's effectively 17% cheaper than a non-VAT-qual vehicle.

Thanks. 

The item that I have been looking at is at a good price ex vat, but when you add VAT to the sale price, it goes over my budget. 

I was thinking about seeing if they were open to offers as this would reduce the VAT I would have to pay. 

Would I need to get a business receipt from them showing the price of the sale, including the VAT? 

I assume it's up to them to pay the VAT.  

Sorry for the silly questions, but I have not purchased anything when VAT has had to be added to second hand items. 

midimanuser

paul_c123 said:

The business would have paid the VAT and reclaimed it. When it comes time to sell, they need to also collect the VAT on that sale (at the secondhand price). 

Contrast with almost all private sales where they are not VAT registered so don't sell it + VAT (nor would have reclaimed it on purchase); or car dealers where the car would have been in the VAT Marginal scheme (dealer pays VAT on the difference between purchase price and sale price).

paul_c123 said:

The business would have paid the VAT and reclaimed it. When it comes time to sell, they need to also collect the VAT on that sale (at the secondhand price). 

Contrast with almost all private sales where they are not VAT registered so don't sell it + VAT (nor would have reclaimed it on purchase); or car dealers where the car would have been in the VAT Marginal scheme (dealer pays VAT on the difference between purchase price and sale price).

Thanks. 
So I only pay VAT on the second hand sale price that we agree on @20%. 

Mildly_Miffed

midimanuser said:

Mildly_Miffed said:

New cars have VAT paid on them.
If they're bought by a VAT reg business, for business use, the business reclaims the VAT - then charges it on the sale price.
This continues right up until the VAT isn't reclaimed on purchase, then it's never VAT-qualifying again.

For a non-business buyer, the difference is simply that you need to add 20% to the +VAT price. If it's still a good price, buy it. No difference to you.

For a business buyer, the difference is that they can reclaim that VAT, so it's effectively 17% cheaper than a non-VAT-qual vehicle.

Thanks. 

The item that I have been looking at is at a good price ex vat, but when you add VAT to the sale price, it goes over my budget. 

I was thinking about seeing if they were open to offers as this would reduce the VAT I would have to pay. 

Would I need to get a business receipt from them showing the price of the sale, including the VAT? 

I assume it's up to them to pay the VAT.  

Sorry for the silly questions, but I have not purchased anything when VAT has had to be added to second hand items. 

The fact it's second hand is irrelevant, really.

They account for the VAT in their normal manner of business, and any receipt they issue will have the VAT broken out - just the same as when you buy anything else with VAT on it.

It looks cheap ex-VAT because you aren't comparing apples with apples. The inc-VAT price is the only one relevant to you.

Of course they may be as open (or not) to offers as anybody else selling any other used vehicle.

MyRealNameToo

midimanuser said:

Mildly_Miffed said:

New cars have VAT paid on them.
If they're bought by a VAT reg business, for business use, the business reclaims the VAT - then charges it on the sale price.
This continues right up until the VAT isn't reclaimed on purchase, then it's never VAT-qualifying again.

For a non-business buyer, the difference is simply that you need to add 20% to the +VAT price. If it's still a good price, buy it. No difference to you.

For a business buyer, the difference is that they can reclaim that VAT, so it's effectively 17% cheaper than a non-VAT-qual vehicle.

Thanks. 

The item that I have been looking at is at a good price ex vat, but when you add VAT to the sale price, it goes over my budget. 

I was thinking about seeing if they were open to offers as this would reduce the VAT I would have to pay. 

Would I need to get a business receipt from them showing the price of the sale, including the VAT? 

I assume it's up to them to pay the VAT.  

Sorry for the silly questions, but I have not purchased anything when VAT has had to be added to second hand items. 

VAT is added to all secondhand items when sold by a business that is VAT registered, what you maybe mean is you are used to businesses listing the price inclusive of VAT rather than excluding.  For some secondhand items (antiques etc) there is a marginal rate where the dealer only adds the VAT to their markup (difference between buy and sell price). 

Its the same as new goods, you pay the VAT to the merchant but its never the merchants money. The merchant then on a monthly or quarterly basis (depending on their size) pays over the net VAT amount to HMRC. They're basically an unpaid agent for HMRC in the same way Tesco and Curry's etc are when you buy anything from them.