VAT on second hand vehicles

[Blue Maverick]

Can anyone tell me how this works, im not VAT registered so if I buy a secondhand van for say £15k and it needs VAT added on is it 20%. I read that if it’s from a dealer they only play VAT on the profit they are making, is this true? If I’m buying off the dealer are they responsible for paying the VAT, what I mean is I give them the £15k plus whatever the VAT is and it all goes through. What if I buy off an individual who is VAT registered privately? How do I check it’s all been paid off?

 

[kinkyblue]

Are cars different then?
I buy stock and sell it, I pay VAT on the sale price, but I claim back the VAT I paid for the stock. If you’re buying for a VAT registered business you could claim the VAT against a your VAT bill.

 

[Really_here]

I would have thought you pay whatever the seller wants for the van and that's the end of it? The VAT payment is down to the seller to sort and I can't see why you'd need to check if they pay it or not.

 

[halfmist]

Can anyone tell me how this works, im not VAT registered so if I buy a secondhand van for say £15k and it needs VAT added on is it 20%. I read that if it’s from a dealer they only play VAT on the profit they are making, is this true? If I’m buying off the dealer are they responsible for paying the VAT, what I mean is I give them the £15k plus whatever the VAT is and it all goes through. What if I buy off an individual who is VAT registered privately? How do I check it’s all been paid off?

If you buy off a VAT registered dealer they have to charge you plus 20 % VAT. They pay it over to HMRC and they should give you a sales invoice showing the amount of VAT and their VAT number. If you buy it from Joe Public or an unregistered trader there is no VAT. Cars are treated differently as they apply what is called the margin scheme. They pay VAT on their profit on the car and they are not obliged to show you the amount of VAT you are paying as it disclose their profit. Again if you buy off a non VAT registered trader or Joe Public no VAT is payable. In all cases you have no responsibility to ensure the VAT is paid over to HMRC.

 

[Blue Maverick]

If you buy off a VAT registered dealer they have to charge you plus 20 % VAT. They pay it over to HMRC and they should give you a sales invoice showing the amount of VAT and their VAT number. If you buy it from Joe Public or an unregistered trader there is no VAT. Cars are treated differently as they apply what is called the margin scheme. They pay VAT on their profit on the car and they are not obliged to show you the amount of VAT you are paying as it disclose their profit. Again if you buy off a non VAT registered trader or Joe Public no VAT is payable. In all cases you have no responsibility to ensure the VAT is paid over to HMRC.

So I’m after a van, if I buy off say an electrician who is VAT registered so he bought his van and claimed the VAT back, when he comes to sell there is VAT to pay to a on registered VAT van when he sells it on, how do I ensure it’s been done?

 

[Really_here]

So I’m after a van, if I buy off say an electrician who is VAT registered so he bought his van and claimed the VAT back, when he comes to sell there is VAT to pay to a on registered VAT van when he sells it on, how do I ensure it’s been done?

Pretty sure it's been explained to you that's it's not your problem?

 

[Blue Maverick]

Pretty sure it's been explained to you that's it's not your problem?

Then why do they advertise plus VAT? why not just advertise the price and then if you can claim the VAT price you do. Go on auto trader £10k plus VAT so I’d take that as £12k, are you saying I pay £10k and it’s upto them to pay the VAT, I don’t think that’s right. I’m on about private individuals.

 

[Really_here]

Then why do they advertise plus VAT? why not just advertise the price and then if you can claim the VAT price you do. Go on auto trader £10k plus VAT so I’d take that as £12k, are you saying I pay £10k and it’s upto them to pay the VAT, I don’t think that’s right.

Because the person buying it may well be able to claim back the VAT. You've already said you're not VAT registered if I'm not mistaken? You'd pay 12k and the VAT amount is irrelevant.

 

[Blue Maverick]

Because the person buying it may well be able to claim back the VAT. You've already said I not VAT registered if I'm not mistaken? You'd pay 12k and the VAT amount is irrelevant.

I understand that but if I handover £12k, £2k is the VAT how do I know that is going to the tax man if it’s from the sparky? Surely there must be a way the tax ban knows it’s swapped hands as he will want his 20% is it the sparkys responsibility to pay it?

 

[Really_here]

I understand that but if I handover £12k, £2k is the VAT how do I know that is going to the tax man if it’s from the sparky? Surely there must be a way the tax ban knows it’s swapped hands as he will want his 20% is it the sparkys responsibility to pay it?

You should get an invoice showing the VAT and their VAT number. Yes it is their responsibility

 

[Barcon]

I understand that but if I handover £12k, £2k is the VAT how do I know that is going to the tax man if it’s from the sparky? Surely there must be a way the tax ban knows it’s swapped hands as he will want his 20% is it the sparkys responsibility to pay it?

You don't need to know because it's not your resonsibility.
Are you really trying to find out is whether or not the sparky is ripping you off for 20%?

 

[Blue Maverick]

You don't need to know because it's not your resonsibility.
Are you really trying to find out is whether or not the sparky is ripping you off for 20%?

No I’m trying not to get a fucking letter from the tax man saying I owe them £2k, how many people when buying a secondhand car/van get a receipt from a private individual?

 

[Really_here]

No I’m trying not to get a fucking letter from the tax man saying I owe them £2k, how many people when buying a secondhand car/van get a receipt from a private individual?

I've bought numerous second hand vehicles and have always got a receipt even if it's just a piece of paper with the price on signed by the seller. Surely it comes down to price, if his van is £2k dearer than the going rate maybe he's just trying to "add it on" and make a couple of grand? The reason many places advertise a price as 'plus VAT' is that many commercial vehicle buyers are VAT registered and may be able to claim the VAT back so the van would cost them £10k rather than the £12k they paid the seller. As the buyer you pay the price you agree and you have to liability to pay any more to HMRC or anyone else. It's the person selling it who is responsible for paying any VAT due not the buyer.

 

[leithblue]

No I’m trying not to get a fucking letter from the tax man saying I owe them £2k, how many people when buying a secondhand car/van get a receipt from a private individual?

1. It’s never* the buyer’s responsibility to calculate or declare the VAT on a sale. If the vendor is suppressing the tax it’s nothing to do with you unless you’re colluding in some way. If a vendor should have charged VAT and didn’t then the sales price is deemed to be VAT-inclusive unless there’s a contract stating otherwise. So it wouldn’t come back to the buyer.

2. Yes, most get a receipt or something, even scribbled down


* unless there’s a self billing arrangement, but you’d know if you’d signed one of those. Or you needed to provide a certificate for charitable use or something similar - and again you’d know if you’d done that.

 

[Citizen of Legoland]

No I’m trying not to get a fucking letter from the tax man saying I owe them £2k, how many people when buying a secondhand car/van get a receipt from a private individual?

If someone is charging VAT then they are a business and therefore their business accounts are completely visible to HMRC so just ensure you transfer the money to a business account and not a personal account and as others have said, get a business receipt.

You won’t be getting a letter, the business receives the VAT portion from you and it’s their responsibility to pass that on to the authorities and is how VAT is handled everywhere.

 

[NZBlue]

Cars are treated differently as they apply what is called the margin scheme. They pay VAT on their profit on the car and they are not obliged to show you the amount of VAT you are paying as it disclose their profit.

Wrong. They always have to show you the VAT you are paying- it is a simple calculation based on the purchase price. The thing you won't know is the vat they paid, nor should you or need to

 

[halfmist]

Wrong. They always have to show you the VAT you are paying- it is a simple calculation based on the purchase price. The thing you won't know is the vat they paid, nor should you or need to

Your post doesn’t make sense and you appear to know nothing about the VAT margin scheme what car dealerships operate. When buying a second hand car it will not show you the VAT payable. My Mrs was a motor dealership accountant for 15 years and I spent the first 10 years of my career as a qualified Chartered Accountant auditing and preparing Accounts for multi franchise dealerships so I think on this occasion my knowledge of VAT may be a little bit more in depth than yours.

 

[NZBlue]

Your post doesn’t make sense and you appear to know nothing about the VAT margin scheme what car dealerships operate. When buying a second hand car it will not show you the VAT payable. My Mrs was a motor dealership accountant for 15 years and I spent the first 10 years of my career as a qualified Chartered Accountant auditing and preparing Accounts for multi franchise dealerships so I think on this occasion my knowledge of VAT may be a little bit more in depth than yours.

Clearly you aren't quite as clued up as you think.

If you buy anything from a dealer, you are legally entitled to a vat receipt showing the vat you have paid. It is simply the relevant vat rate on top of the net price

The margin scheme relates to the amount of vat that the dealer will pay on each transaction,. This relates to the difference between the purchase and the sale price.

The two will never be the same and the end purchaser is not entitled to see the amount that the dealer pays. If you are unable to understand this then I suspect that you are overinflated your own so called abilities

 

[halfmist]

Clearly you aren't quite as clued up as you think.

If you buy anything from a dealer, you are legally entitled to a vat receipt showing the vat you have paid. It is simply the relevant vat rate on top of the net price

The margin scheme relates to the amount of vat that the dealer will pay on each transaction,. This relates to the difference between the purchase and the sale price.

The two will never be the same and the end purchaser is not entitled to see the amount that the dealer pays. If you are unable to understand this then I suspect that you are overinflated your own so called abilities

Last chance because I think I am wasting my time.
Taken directly from the HMRC website so if they are giving out wrong instructions take your case to them.
When issuing an invoice under the margin scheme… “the invoice must show” ….”total price you must not show the VAT separately “
This if you care to look contradicts your second paragraph where you are saying you are entitled to get a VAT receipt but by the 4th paragraph you are saying you are not.
There is little point in carrying on an argument with an idiot.

 

[NZBlue]

Last chance because I think I am wasting my time.
Taken directly from the HMRC website so if they are giving out wrong instructions take your case to them.
When issuing an invoice under the margin scheme… “the invoice must show” ….”total price you must not show the VAT separately “
This if you care to look contradicts your second paragraph where you are saying you are entitled to get a VAT receipt but by the 4th paragraph you are saying you are not.
There is little point in carrying on an argument with an idiot.

Bollocks

I suspect your selective quoting refers to the purchase by the dealer.

If a plumber buys a used van from a dealer he is entitled to claim the vat back. For this he uses his receipt. The margin scheme does not come into it. The only time an invoice cannot show the vat is when the dealer has actually done the initial purchase as they cannot use the scheme if vat is paid. You are full of shit my friend.

Oh by the way, my 4th paragraph does not say you are not entitled to a receipt- that is just a total fantasy on your part.