2nd Hand MH & the dreaded VAT

[IanF]

Look forward to your comments on this one and will not be offended at all!
Am I being stupidly pedantic or just being a tight a----- Scot in not being prepared to pay for a second hand MH (2 years old) which has just been reduced from its new price by the VAT payable when new?After all the VAT does not represent any part of the vehicle simply the tax dear George Osborne wanted from the purchaser of it! I can understand that the sellers must be aggrieved that he has nothing to show for the VAT he paid.
My way of thinking is that VAT is not payable on a second hand MH and being 2 years old there must also be depreciation to be taken off it's new cost.

Thanks again Ian

 

[GJH]

Depreciation on motorhomes is a strange beast and doesn't seem to follow any rules. There have been a number of threads on here mentioning that people had sold their vans for more than they paid some years beforehand.

Probably the best guide for a particular van is to use Google and see what they are selling for generally.

 

[greyman1]

whichever way you want to look at it ,it is still a 20% saving of the ON THE ROAD cost of a new van !

 

[WAG2CRU]

I understand where you are coming from but, when ever I buy a new vehicle the on the road price paid in total by me is the price I paid for it, vat or no vat at the end of the day. If you are trying to work out what you are prepared to pay for a second hand van by deducting 20% for the vat and then an allowance for depreciation I think you are probably likely to be disappointed. Any second hand van or anything else for that matter is worth what the best buyer available is prepared to pay at the time, irrespective of what the total original price was. If you don't like the asking price make an offer, the seller can always say no!

 

[Robert Clark]

If buying from a dealer then the screen price is the point at which negotiations begin....
Dealers know that some buyers simply won't negotiate, so why offer them their best price.
If I was buying second hand I'd take off the VAT and work back from there depending on age and condition

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[Emmit]

I assume your prospective purchase is from a private seller (or is he a VAT Trader selling as a private seller?

 

[hilldweller]

After all the VAT does not represent any part of the vehicle

Of course it does, unless you are VAT registered.

Here is a new van £50,000 to you. That's it. That is what you have to pay.

Now 2 years on the dealer says the price is £40,000.

 

[IanF]

Of course it does, unless you are VAT registered.

Here is a new van £50,000 to you. That's it. That is what you have to pay.

Now 2 years on the dealer says the price is £40,000.

What part does the VAT buy of the MH?

 

[hilldweller]

What part does the VAT buy of the MH?

You buy a new MH.

You pay FIAT £9000
You pay a converter £30000
You Truma £2000
You pay HMG £5000

All you know is the total bill. The VAT part ensures that it is built to regulations, it ensures you can go there in safety to buy it, it enures you will be treated when you smash it up and stick your head through the window.

 

[jockaneezer]

So what you're saying is, it's a used two year old van that costs 20% less than the price of a new van. So it's dropped a fifth of it's value in depreciation in those two years, if you think that's a fair price, take it from there.

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[laird of Dunstan]

I agree with WAG,s comments , the vat thing is a bit of a myth,the dealer will have to send 20% of the purchase price to the taxman but to think that that instantly reduces the value of the item by 20% just does not happen.

 

[Robert Clark]

What part does the VAT buy of the MH?

In simple terms it gets you nothing, it's simply a tax paid (and reclaimed) by manufacturers and paid but not reclaimed by consumers (you and me)

 

[IanF]

I agree with WAG,s comments , the vat thing is a bit of a myth,the dealer will have to send 20% of the purchase price to the taxman but to think that that instantly reduces the value of the item by 20% just does not happen.

But why not he never paid any more than the cost of the MH he recovered 100% the VAT

 

[WAG2CRU]

All of it unless you are vat registered and its for your business, the vat is simply part of the cost of purchase.
I bet you would say your bacon roll cost £2.40 you wouldn't say it was £2,00 and forget the vat would you?

 

[IanF]

All of it unless you are vat registered and its for your business, the vat is simply part of the cost of purchase.
I bet you would say your bacon roll cost £2.40 you wouldn't say it was £2,00 and forget the vat would you?

Not quite sure the relevance of a bacon roll however!

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[WAG2CRU]

But why not he never paid any more than the cost of the MH he recovered 100% the VAT

What about the dealers 30% profit, that isn't reflected in the value of the motorhome is it, to be sure, best knock of 50% plus depreciation and start there!

Good luck with that!

 

[Paddywack]

But why not he never paid any more than the cost of the MH he recovered 100% the VAT

No he didn't - he paid the difference between his input and output VAT to HMRC.

 

[eddie]

The dealers back caculate 16.666% of the new selling price of the retail price. This is paid the HMRC

If the dealer buys a 2nd hand van for £10k and sells it for £14K The dealer pays the VAT element only on the £4k profit

If Van Bitz buy the motorhome, we can claim the VAT element back from the HMRC

When Van Bitz sells a motorhome, we too then have to pay 16.666% of the selling price to the HMRC

 

[Robert Clark]

Just had a thought.....
The dealer has to add VAT to the selling price of the second hand van too

 

[trekkin]

As I understand it VAT has to be paid on the vehicle at some point,

So if a new vehicle VAT is paid,

However if the vehicle is then, registered as a disable vehicle, or exported the VAT is reclaimed, or if it is reclaimed as it is purchased as an asset of a VAT registered company, then the VAT is due at resale,

If the vehicle is imported not new then VAT is also due

Not an expert but my understanding.

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[Tootles]

Does this help??

Margaret Stone, the Daily Mail's Money Doctor, replies: There are two ways in which motor dealers handle VAT on used vehicles. Some charge VAT only on the profit they make on the sale of the car. This is known as the second-hand margin scheme, used by most car dealers.

Alternatively, they can charge VAT on the total transaction cost - that is the second-hand selling price achieved. It depends on how they choose to keep their records.

The second-hand margin scheme requires more paperwork-from the dealer. He must, for example, keep the relevant stock books which include details such as the car's engine number.

Each method of charging VAT is legal, and HMRC is concerned only that the dealer tells them which scheme he is using.

There is no obligation for the dealer to tell the customer at the outset which method of charging VAT will be used. Nor is there a legal right for the customer to know, or be told, how much of the price comprises VAT.

 

[trekkin]

As I understand it VAT has to be paid on the vehicle at some point,

So if a new vehicle VAT is paid,

However if the vehicle is then, registered as a disable vehicle, or exported the VAT is reclaimed, or if it is reclaimed as it is purchased as an asset of a VAT registered company, then the VAT is due at resale,

If the vehicle is imported not new then VAT is also due

Not an expert but my understanding.

 

[JimboT]

The dealer only pays VAT on the profit or commision if selling on owner's behalf if he puts it through the books!
Same as second hand goods traders.
If the dealer has not registered/transfers the vehicle to himself there will be more movement on price as less vat to pay he can off set on prep/cleaning charges.
so if he bought a motorhome for 40,000 and sold for 50,000 service prep hand over warranty = £7000 he would pay VAT on £3000 he would pay VAT £500.
Regards
Jim

 

[laird of Dunstan]

i have an expert sitting next to me on the sofa , my missus is an accountant
at the end of the day , you may find someone who will accept the argument that the vat has been paid and reduce the second hand value by 20% before calculating the depratiation , but personally i would not , i would calculate the resale value on the original price , having sold boats , motorcycles and a caravan ive heard quite a few reasons as to why i should drop my asking price but never the vat element

 

[BobtheBass]

Its funny really how vat on motorhome purchases is something we think about, but vat on car purchases never crosses your mind? I think the same vat rules apply to cars as they do to motorhomes.

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[deleted-member02]

So much more to it than VAT.
Price increases / inflation
Currency fluctuations
Availability of model
Time of year
Location
Ever growing demand.... it goes on.

Bearing in mind that many 10year old vans are worth 50%+ of original value, you could argue a good case for saying 20% is a big discount for a couple of years - just another take on it !

 

[Forestboy]

VAT is part of the full price paid just like the bacon roll.
Simples
Might not like it but as the dog said when he sat on the soap " thats lifeboy"

 

[etap]

Hi Oldflemo,
The vat element of most things you buy including motorhomes has no bearing on the price you buy or sell something for , as everything is only worth what you can get for it, so if the MH you want cost x then do you want it for that price or not because it will only fetch what people will pay.
How sellers who are registered for vat deal with that element is of no consequent, though most dealers would pay vat on the profit element of the sale( the margin).
Probably not added anything new but I've had my say.
Etap

 

[The Wino]

As above the price of anything is what you can sell it for you can work out what sums you like but it will sell for the market value same for houses cars motorhomes anything. If you want to use your theory as a bargaing tool great but if I were selling it I would try to get the best possible price and I bet you will when you sell it on in the future. If new motorhomes went up by 50% would you sell yours secondhand for what you paid less depreciation.......of course not you would get what you could!!

David

 

[chaser]

Don't see what difference it makes , you pay what you want to pay if the price of the van is more than you want to pay , hard luck , wether it's vat or what makes no difference unless you are vat registered and can draw it back.