vat on used

Discussion in 'Introduce Yourself' started by Goody, Sep 2, 2015.

  1. Goody

    Goody Read Only Funster

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    May seam like a daft question, but can any one tell me if vat is levied on used motorhomes.
    I had this conversation with a friend and we kind of came to the conclusion that the government surely only gets one bite at the chunk of cash when its sold new.

    Our rationale was that at each sale if vat was levied it could be worth more than half the cost of the vehicle after 4 or 5 resale's.

    Thanks to all the accountants out there
     
  2. NickNic

    NickNic Funster Life Member

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    If it was originally sold to a VAT registered business or individual who claimed the VAT they were charged back then VAT has to be charged on the sale price when it is sold on.

    If no VAT was claimed back when it was purchased new then none is charged on the resale.

    There are probably a load of more complicated details that apply but that's the basic version.
     
  3. Derbyshire wanderer

    Derbyshire wanderer Funster Life Member

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    The vat is the same as car sales I.e. The dealer pays vat (and therefore charges you indirectly) on the profit they make new or s/h.
    The vat is NOT shown on the invoice to you as it is not reclaimable unless you have a vat number to use for a business purchase.
    Registered disabled buyers can buy a NEW vehicle vat free!
     
  4. DanielFord

    DanielFord Funster

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    In a nutshell, what he said! You will probably be charged VAT if you purchase an ex-rental, for example!
     
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  5. NickNic

    NickNic Funster Life Member

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    No it isn't actually. VAT qualifying cars are a special headache all of their own. What you posted is kind of correct when buying new but the OP is talking specifically about used.
     
  6. Derbyshire wanderer

    Derbyshire wanderer Funster Life Member

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    Sorry NickNic but you are mistaken. The vat rules are very clear regarding dealers on what they call the 'margin rules' ie the profit.
    Vat qualifying cars are those that are classed as a commercial vehicle which do have the vat listed on the invoice. This does not detract from the fact that vat is paid on s/h sales if sold as a trader.
    I only mentioned new because adapted vehicles can qualify but not on resale.
     
  7. NickNic

    NickNic Funster Life Member

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    I'm not arguing with you other than to say regarding cars you are completely wrong. Couldn't be more wrong. I'll stick with my accountants advice thanks.
     
  8. DanielFord

    DanielFord Funster

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    I do love it when people misinterpret rules vociferously. In my job I advise on the rules surrounding exactly this. VAT rules are extremely complex, and you have to delve very deeply into them to get to the true answer. To simply state that a trader must charge VAT is so wide of the mark it is untrue, although, to the amateur reading the rules, it would appear that this is the case. It is far more complex than that. It depends on the VAT registration status of the trader, the usage of the vehicle, what it was used for etc. etc.
    So as I stated, if you purchased an ex-rental from the hire company, that would be VAT qualifying. @NickNic gave a broad description, which was largely correct.
     
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  9. mariner

    mariner Funster Life Member

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    VAT is paid by a VAT registered used car dealer, either on the profit margin or on the full resale price, depending on how the books are kept.
    They are not obliged to tell the purchaser which method they use or how much VAT is paid.
    There obviously are exceptions to this as there are with all transactions involving VAT.

    :cooler:
     
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  10. NickNic

    NickNic Funster Life Member

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    Unless it's a VAT qualifying vehicle and the purchaser is VAT registered in which case they are.

    As @DanielFord said it's far to complex a question to be answered in one or two sentences apart from in very broad terms.
     
  11. Derbyshire wanderer

    Derbyshire wanderer Funster Life Member

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    You are very quick to tell me I am wrong but do not bother to say why. If you look on the UK gov website, the explanation is there about both ways of recording the vat due.
    I happen to know about it as a) I was in the motor trade and b) I was vat registered.
    I am unsure what you have asked your accountant but this is one of the reasons that business's lease cars. Ie you can't claim the vat on the purchase but you can on the lease costs.
    As for not arguing, for you to say I am 'completely wrong, could be more wrong' says a lot more about your need to contradict and argue with me and in fact most people who offer advise on this forum than is nesseccary.
     
  12. mariner

    mariner Funster Life Member

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    Of course VAT must be shown, where the purchaser is entitled to reclaim VAT but I think here that the poster is referring to Joe Public.

    :cooler:
     
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  13. DanielFord

    DanielFord Funster

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    Actually that is not correct, if in the example I have quoted a few times now, the vehicle was originally purchased for the business as an asset, like a hire vehicle, then the VAT can be claimed, and must be applied upon sale.
    The manual for VAT regulations runs to about 600 pages, and cannot be summarised in a few sentences!
     
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  14. NickNic

    NickNic Funster Life Member

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    That's why the question can't be answered 100% accurately quickly or easily (y) Anybody that tries to give a definitive catch all answer in a couple of sentences is likely to be misleading, however unintentional.
     
  15. Derbyshire wanderer

    Derbyshire wanderer Funster Life Member

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    Yes, I think the simplicity of these posts has missed some points but I did state above the difference of vat qualifying and in simple terms a car is not but a van could be.
    I am not trying to complicate things but the difference to me in the trade days was selling 10 or 12 seat land rovers put one in each category.
    I did have the manual and yes HMRC expected me to understand it or else repay any vat I should of charged but did not! Luckily this did not occur as I invoiced to their satisfaction.
     
  16. DanielFord

    DanielFord Funster

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    Ain't that the truth, you have to understand the massively complex rules, and if you get it wrong, you get fined! I'm only bitter because I did my VAT return today! LOL
     
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  17. Goody

    Goody Read Only Funster

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    Thanks Guys for all replies to my post.
    I now know much more about VAT than before. I guess in the case of a M/H dealer, most of who would be vat registered I would be charged vat.

    What sparked this conversation was the adage that you may as well burn a few £k in vat when buying new so buy S/H. From the comments posted it would appear most S/H vehicles will also have an element of vat built into the price.
     
  18. TheDogMan

    TheDogMan Funster

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    As I understood it used motorhomes fall under what is called the used car scheme which means VAT is payable on the dealer profit on the deal, SO, no dealer wants to tell you how much VAT is withing the selling price as you will be able to calculate his profit. So a question for the experts !!!
    If you PX a MH in that you originaly quite legally claimed back the VAT on, for instance your PX price is £25,000 so you issue a VAT invoice for £20833 plus VAT and declare the VAT on your return, does the dealer claim the VAT back on his return and when he sells it does he have to charge 20% VAT within his selling or does it now fall under the used car scheme.
    This has come up because my mate is going to PX his van in and the dealer will not or cannot give him an answer
     
  19. DanielFord

    DanielFord Funster

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    Even that is not straight forward, it would depend on why the VAT was originally claimed back, I imagine it was purchased as a business asset. Thus when selling it, yes you would have to issue a VAT invoice and give the money to HMRC. That bit is (relatively) easy. Don't forget, if it was a business asset, it should have been written down and the allowances for that claimed throughout it's life.

    The dealer who accepts it on the other hand has a total nightmare, so much so that I do not have a clue right now about how they would deal with the sale, there are too many variables.
     
  20. John Laidler

    John Laidler Funster

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    I think the "discussion" above probably only served to confuse everyone. Very few people could buy a MH and claim back the VAT. Being VAT registered isn't the half of it, the MH would have to be a legitimate business expense. A few singers or sportsmen perhaps or people who use them at exhibitions but if you are a VAT registered plumber forget it unless you are in a very specialised line.:)

    So virtually all MHs bought new had VAT added in a way the purchaser cannot get back. When they come to sell it the VAT is then just part of the original purchase price from the seller's point of view.

    For example, imagine Fred buys a new MH for £50K including VAT. After a while he sells it to a dealer for £25K. The dealer might then add a mark up of £5K and sell it Bert for £30K. That there may be an element of VAT in the dealer's profit matters little, the main point is the big VAT payment on the new MH is still there but it is now effectively lost. If there was £10K of VAT paid on a new vehicle then when it's value halves there is still £5K of VAT in the secondhand price in broad terms and secondhand prices will reflect this.

    When a dealer buys a secondhand MH there is nothing they can do about the VAT paid on the original purchase except in the unlikely event the original purchaser was able to reclaim the VAT, in which case he would have given Fred something like £22K not £25K because he is going to have to add VAT on the full selling price of the MH before he can sell it to Bert for the same £30K he would have done had the original VAT not been reclaimed. In other words, don't worry about whether or not VAT was paid or reclaimed on the new vehicle they will still sell to the public secondhand for the same price.

    So in summary, I think you just need to consider the price you are paying and forget VAT.
     
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