VAT on sale of Vehicle

VAT on sale of Vehicle

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Hi All

This is a simple question, but i think in my research for a definitive answer I have some what complicated it.

Client has sold a vehicle (Navara) to a dealership for cash and raised an invoice to them. They are not in business of buying and selling vehicles, only purchase for business use.

At this moment in time I am unsure that whether VAT was claimed on the initial purchase of the vehicle.

Do they need to charge VAT on the sale or is it exempt? I have some conflicting ideas and research.

Thanks

Replies (3)

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By Craigie_Bhoy
28th Feb 2015 14:12

If VAT registered
Then VAT should be charged on the sale. Pretty sure (but haven't checked) that this is one of these twin cab vehicles that qualifies as a van.

Assuming VAT was claimed, which I am sure you will find out soon enough

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RLI
By lionofludesch
28th Feb 2015 14:23

Makes it hard

It'd've helped if you'd said whether it was a car, van, wagon or whatever instead of saying "vehicle".  Even if you didn't know, you could have said so.  I'm assuming Craig's right and it's not a car.

Anyway - if there was no VAT charged on the purchase price you can use the margin scheme. Effectively, it'll be VAT free if you sell at a loss (which seems likely).  The client mustn't issue a VAT invoice for it (whether there's a profit or loss).

If the client did pay VAT on the purchase, you're stuck with charging VAT on the sale, if the client's registered.

Note that if the buyer is registered himself, the margin scheme won't be a good idea as he won't be able to recover any VAT.  Just issue a normal VAT invoice.

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By russab2000
28th Feb 2015 17:33

Thanks all. The vehicle is classed as a van. Found out that vat was charged on the initial purchase,  therefore going to charge vat on the sale. 

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