Ebay seller wanting to add vat

[artie]

If they are VAT registered then they have to charge some VAT and give you a receipt if you ask for it. The amount of VAT charged on a secondhand car depends on what VAT scheme they are running.

I know I said earlier that there is no point continuing this, but it's Sunday afternoon so here goes.

To the best of my knowledge there are only three options for VAT, 20%, 5% and 0%.

Most common is probably 20% on yer TVs and other consumer goods, 5% on heating oil and a few other things and 0% on most food and essentials. VAT is only due once on any item. But due to the system may be charged and reclaimed many times before HMRC gets to finally keep it and sometimes they never get any.

If a registered business buys a "vatable" item and reclaims the VAT, then uses it until it is scrapped then HMRC gets 0.

If a registered business buys an item and reclaims the vat, uses it for a while and sells it on to another registered business for a lesser amount + VAT and they subsequently reclaim the VAT, HMRC receives nothing.

If a registered business buys an item and reclaims the vat, uses it for a while and sells it on to a non registered person who pays the price + VAT, HMRC gets it's slice, and is now out of the picture.

Should the non registered person at a later date sell the item to a registered business It does not magically become liable for vat again, because he did not make it and he did not pay vat on it.

What he is supposed to do is record what he paid for it, what he sold it for and pay HMRC the difference divided by 1.2 which comes out the same as him charging 20%. And he won't give a receipt because he did not charge VAT on the item, he paid vat on the service he provided and it's not reclaimable because it can't be transferred.

 

[RogerS]

Partly true.

However where I think you are wrong is in the last two points.

If I buy a machine from Axminster, they charge me VAT which goes to HMRC via Axminster's VAT return.

If I later sell this machine to a secondhand machine dealer who is VAT registered, he will not claim back any VAT from HMRC because I am not VAT registered and will not have charged him any VAT. However, when he then sells the machine to someone else he has to add VAT at a rate depending on whether or not he is operating the VAT margin scheme. https://www.gov.uk/vat-margin-schemes/overview

 

[doctor Bob]

Vat is very simple, reading this thread makes it seem incredibly complicated, do you all work in the civil service or something?

 

[artie]

Partly true.

However where I think you are wrong is in the last two points.

If I buy a machine from Axminster, they charge me VAT which goes to HMRC via Axminster's VAT return.

If I later sell this machine to a secondhand machine dealer who is VAT registered, he will not claim back any VAT from HMRC because I am not VAT registered and will not have charged him any VAT. However, when he then sells the machine to someone else he has to add VAT at a rate depending on whether or not he is operating the VAT margin scheme. https://www.gov.uk/vat-margin-schemes/overview

We are nearly there now.

He has no choice, Legally

He can't charge VAT because he did not manufacture the item nor did he pay VAT when he purchased it.

It says quite clearly in the link you provided that the margin scheme is for use with second hand goods and that goods which don't fall under it must be treated in the ordinary way.

Just think about it.

Dealer buys a used item for £1000 wants to make 200 sovs for himself so puts it up for sale for £1200 + VAT

Lets just forget for a moment about registered dealers, because the general unregistered public far outnumber them.

He needs to get someone to pay him £1440.

Doing it the proper way to make the same profit he only needs to ask £1223.32.

Stands a much better chance of getting a buyer and making some money.

There is no reason for a dealer to be charging 20% vat on used goods unless he intends to pocket the money himself.

Except of course as discussed above if he paid VAT.

 

[RogerS]

I give up.

You win.

 

[doctor Bob]

Artie....... I really hope you don't run a business.

 

[artie]

Artie....... I really hope you don't run a business.

I do and I have showed a profit every year for the last 28 years.

 

[Sporky McGuffin]

Artie....... I really hope you don't run a business.

Though it's hard to tell if he'd be getting fined or refunded.

 

[doctor Bob]

Artie....... I really hope you don't run a business.

I do and I have showed a profit every year for the last 28 years.

Congratulations on the profit, are you vat registered?

 

[artie]

I give up.

You win.

I am not here to win. I am here to learn, and if I can, pass on some useful information in return.

 

[artie]

Artie....... I really hope you don't run a business.

I do and I have showed a profit every year for the last 28 years.

Are you vat registered?

Had you actually read my posts you wouldn't have to ask .

 

[doctor Bob]

Are you vat registered?

Had you actually read my posts you wouldn't have to ask .

OK, I have now trawled through the posts and seen "it's been a while since you were Vat registered". I think you are mistaken on the vat rules.

 

[artie]

Are you vat registered?

Had you actually read my posts you wouldn't have to ask .

OK, I have now trawled through the posts and seen "it's been a while since you were Vat registered". I think you are mistaken on the vat rules.

Well I said I could be wrong right from the start and invited anyone to show me.

But so far all I have had is opinions which I believe are no more valid than mine.

 

[MartinCox]

We run a business that turns over about £750k a year. So we are obviously VAT registered and use a chartered accountant to calculate and submit our VAT returns which end up us paying HMRC about £35K a quarter. Most of what we buy is from VAT registered businesses almost always at the rate 20% rate. We do buy small amounts from people whose turnover keeps them below the VAT threshold. We have a fleet of cars which we buy nearly new/ex-demos and we have invoices from the main dealers which show the VAT we are paying,

We remain on the cash-accounting process allowed by HMRC and the calculation therefore is essentially a simple one. Add up the VAT paid out to suppliers in the quarter and if this includes suppliers who do not charge VAT, then those VAT amounts are zero. Then add up the 20% VAT we received from invoices we have raised and that were paid in that quarter. Take one away from another and you end up with the money you owe HMRC. When we started we bought equipment before we sold anything (raised invoices and got paid) and so the amount of VAT we paid out exceeded the VAT we received. Therefore, we got a net VAT refund.

If we buy something like a car on which we have paid VAT - as shown on the supplier invoice - and later sell the item either for less or more, then the principle our chartered accountant employs is that, if you paid VAT when you bought it, then you must charge VAT when you sell it. If we bought something and didn't pay VAT, then we cannot charge and later claim VAT.

Now, this is only a chartered accountant from a very large, well respected practice with many branches. Obviously, nothing like the credibility and experience of some of the contributors to this thread.

 

[artie]

If we buy something like a car on which we have paid VAT - as shown on the supplier invoice - and later sell the item either for less or more, then the principle our chartered accountant employs is that, if you paid VAT when you bought it, then you must charge VAT when you sell it. If we bought something and didn't pay VAT, then we cannot charge and later claim VAT.

Seems reasonable to me.

 

[clk230]

Partly true.

However where I think you are wrong is in the last two points.

If I buy a machine from Axminster, they charge me VAT which goes to HMRC via Axminster's VAT return.

If I later sell this machine to a secondhand machine dealer who is VAT registered, he will not claim back any VAT from HMRC because I am not VAT registered and will not have charged him any VAT. However, when he then sells the machine to someone else he has to add VAT at a rate depending on whether or not he is operating the VAT margin scheme. https://www.gov.uk/vat-margin-schemes/overview

We are nearly there now.

He has no choice, Legally

He can't charge VAT because he did not manufacture the item nor did he pay VAT when he purchased it.

It says quite clearly in the link you provided that the margin scheme is for use with second hand goods and that goods which don't fall under it must be treated in the ordinary way.

Just think about it.

Dealer buys a used item for £1000 wants to make 200 sovs for himself so puts it up for sale for £1200 + VAT

Lets just forget for a moment about registered dealers, because the general unregistered public far outnumber them.

He needs to get someone to pay him £1440.

Doing it the proper way to make the same profit he only needs to ask £1223.32.

Stands a much better chance of getting a buyer and making some money.

There is no reason for a dealer to be charging 20% vat on used goods unless he intends to pocket the money himself.

Except of course as discussed above if he paid VAT.

If a person or business is VAT registered then he has to charge VAT what is so hard to understand ??
Just because he didn't pay vat at purchase point doesn't mean he can't charge vat OF COURSE HE HAS TO

Simple vat registered means you have to charge vat and are able to reclaim the vat.

 

[artie]

Partly true.

However where I think you are wrong is in the last two points.

If I buy a machine from Axminster, they charge me VAT which goes to HMRC via Axminster's VAT return.

If I later sell this machine to a secondhand machine dealer who is VAT registered, he will not claim back any VAT from HMRC because I am not VAT registered and will not have charged him any VAT. However, when he then sells the machine to someone else he has to add VAT at a rate depending on whether or not he is operating the VAT margin scheme. https://www.gov.uk/vat-margin-schemes/overview

We are nearly there now.

He has no choice, Legally

He can't charge VAT because he did not manufacture the item nor did he pay VAT when he purchased it.

It says quite clearly in the link you provided that the margin scheme is for use with second hand goods and that goods which don't fall under it must be treated in the ordinary way.

Just think about it.

Dealer buys a used item for £1000 wants to make 200 sovs for himself so puts it up for sale for £1200 + VAT

Lets just forget for a moment about registered dealers, because the general unregistered public far outnumber them.

He needs to get someone to pay him £1440.

Doing it the proper way to make the same profit he only needs to ask £1223.32.

Stands a much better chance of getting a buyer and making some money.

There is no reason for a dealer to be charging 20% vat on used goods unless he intends to pocket the money himself.

Except of course as discussed above if he paid VAT.

If a person or business is VAT registered then he has to charge VAT what is so hard to understand ??
Just because he didn't pay vat at purchase point doesn't mean he can't charge vat OF COURSE HE HAS TO

Simple vat registered means you have to charge vat and are able to reclaim the vat.

Because you say so.?

This is getting beyond ridiculous.

 

[clk230]

No because THE VAT MAN says so , what is it you don't understand

 

[artie]

No because THE VAT MAN says so , what is it you don't understand

Show me where the vat man says that used goods are vat rated at 20%

Go on.

 

[clk230]

No because THE VAT MAN says so , what is it you don't understand

Show me where the vat man says that used goods are vat rated at 20%

Go on.

I think you'll find Roger very kindly showed you the link , if the seller decides not to use said scheme he must charge vat on the full price .