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Need to charge VAT on sale of van?? Not claimed on purchase

It's so easy so please confirm a schoolboy question.

Client - a mechanic - purchased a van from a private individual, so not VAT charged/claimed.

Van now up for sale.

I told my client that VAT will need to be accounted for out of his sale proceeds / he'll need to charge VAT on sale. I can't see any reason not to can you??

I don't suppose he can use 2nd hand margin scheme for one transaction??



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22nd Feb 2013 14:41

Selling a standard rate item hence vat charged at 20% on net sale, or 1/6th of the gross. 2nd hand scheme does not include commercial vehicles.


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22nd Feb 2013 14:53

Margin Scheme

The margin scheme applies to sales of vans as well as any second hand item.  At one time it was limited to the motor trade and excluded vans, but those rules changed years ago - possibly as many as 20, not that that's relevant

If the van is sold for more than cost, then the registered trader accounts for VAT on the margin.  If at a loss, no VAT.  Either way, he must not issue a VAT invoice to his customer.

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By Glennzy
22nd Feb 2013 15:01

surely he is selling at a loss.

If he bought it some time ago surely he is now selling at a loss. If he is not a car dealer I cannot see how he can apply the margin scheme.

He should charge VAT on selling price ie £600 + VAT.

Its most likely if its a commercial vehicle that buyer is VAT registered anyway.



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22nd Feb 2013 15:12


Glennzy wrote:

If he is not a car dealer I cannot see how he can apply the margin scheme.

Where does it say that only dealers are entitled to use the second hand goods scheme? EDIT - posted at the same time as previous comment

Glennzy wrote:

Its most likely if its a commercial vehicle that buyer is VAT registered anyway.


Possibly likely. But since the van was purchased from a private individual, who's to say it's not going on to a private individual? And even if it is being sold to a business, who's to say that the purchaser is registered?

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22nd Feb 2013 15:11

Margin scheme

Wow, I was wrong! Thanks Cloud. Your don't even have to be a car dealer, it applies generally.

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22nd Feb 2013 15:45

Margin Scheme yes or no

A second hand van can be sold as a margin scheme vehicle, where is was purchased without VAT charged by the previous (private) owner. Vans, like cars, can be included in the scheme. And the scheme can be used for one-off transactions, without the need to full record-keeping requirements.

However, since it is a van, the client can choose not to use the margin scheme. This will work if the van is to be purchased by a VAT-registered person, who can recover the VAT. The client will 'discount' the van by a small amount (since he no longer has to pay VAT on the margin), and then add VAT at 20% which the purchase reclaims. WIN-WIN

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By Glennzy
23rd Feb 2013 15:34

Well said Pawncob.
It's an asset he is selling so will be less then he paid for it so margin scheme would produce no vat.
Selling it with VAT added will keep everyone happy providing buyer is VAT registered.

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