Hi all,
Currently looking for a car for the missus and have seen one online. It's a car and in fact the only car advertised on a commercial van dealer's website. The price is plus VAT.
I have Googled the number plate and have seen it advertised, along with a Youtube advert back in 2014 at Hendy Renault in Tunbridge Wells.
I'm confused about the Vat element. Somed of their vans state 'No VAT' some do. I thought that if the van's Vat was reclaimed when purchased new then it has to charged on resell unless it is resold privately i.e a non dealer. What about this car though? It seems strange to have VAT listed on top of a car that's near 7 years old.
One other thing, if I were to purchase it could I claim some of the Vat back through my business?
Thank you!
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Possibly a mistake. Maybe they've knocked the VAT off the advertised price so it looks cheaper - I believe they can do that if they mostly sell to the trade.
I'm sure the VAT is not reclaimable. And putting it through the business would mean your wife would have to declare it as a company car and you'd have to do the whole P11D business?
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Thanks Tigger.
If not a mistake and they are charging VAT I'd want the receipt to show the VAT separately. I have worked out the VAT inclusive price which still seems reasonable. I just wondered if they are able to add the vat on in the first place - what scenarios would lead to a 7 year old car still attracting vat.
The reclaiming through my business was an afterthought - I'll leave it to the accountant to advise.
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Only certain businesses can claim back the VAT on purchase (they have to add VAT on sale) - Car leasing companies, car rental companies, garage demo cars, driving schools etc etc.
Even if your company is VAT it is unlikely that you can claim VAT back on car - Vans, pickups etc are reclaimable hence the expensive pickups run by some small builders etc.
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You pay VAT on all goods if they are new or not. If I buy a refurbished laptop I have to pay VAT on it. It may be different with cars though.
However I believe vans are usually sold ex VAT as it is assumed the buyer will be VAT registered and claim back the VAT. Most used cars will be sold to private buyers so the VAT will be hidden in the price.
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>> You pay VAT on all goods if they are new or not.
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Presumably only if whoever you are buying them from is VAT registered? - otherwise how will HMRC know they are entitled to a cut.
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Sorry I should have made that clear, yes only if the trader is VAT registered and any full time car trader really should be, as you have to be VAT registered if the turnover is over around £80k.
Of course private sales or sales from 'part time' traders won't attract VAT.
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Very unusual for a car to be advertised +VAT. Probably a mistake. If it's not a mistake, then the VAT could only be reclaimed by a business if it's ONLY used for business and there's no private use. Generally taxis and driving school cars.
Most second hand cars are sold under the VAT margin scheme, whereby the dealer only pays VAT on his profit element. This is because he mostly buys second-hand cars from private vendors.
So, buy the car for £1,000. Sell it for £2,200. Profit is £1,200 of which £200 is payable to the VAT man.
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From
www.gov.uk/vat-vehicle-sales/y/someone-in-the-uk/used/yes
1 Who are you selling it to?
Someone in the UK
2 Is it new or used?
Used
3 Was VAT claimable when you bought or imported the vehicle?
Yes
Charge standard-rate VAT
Charge the standard rate of 20% on the total cost of the vehicle, including:
accessories - even if a different rate of VAT is charged when they’re sold separately (eg children’s car seats)
the deposit - account for it in the VAT period you receive it
the registration fee and vehicle tax if you first register the vehicle in your own name
If you first register the vehicle in your customer’s name pass the cost on to them and don’t charge VAT. This is known as a ‘disbursement’.
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>> From
>> www.gov.uk/vat-vehicle-sales/y/someone-in-the-uk/used/yes
>>
Presumably none of this would apply to a 'small time' trader not registered for VAT (i.e. turnover less than 50K a year or whatever it is now)
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>> Presumably none of this would apply to a 'small time' trader not registered for VAT
>> (i.e. turnover less than 50K a year or whatever it is now)
Correct. £80-odd k these days. That's not many second-hand vehicles though, is it. I suppose if you're selling 1 1k car per week you'd be under the limit, but otherwise...
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VAT on second hand car - Tigger
