Hi,
I have a VAT registered client who is operating the VAT Flat Rate Scheme.
They have purchased a van from a non VAT registered individual for £9,000 and now wish to sell. No VAT was claimed on the purchase. They are not a vehicle dealer. What is the position on sale?
I understand that if VAT had been reclaimed on purchase then VAT would have to be added at 20% on sale and paid over to HMRC. As no VAT was reclaimed on purchase the vehicle sale would normally be dealt with under the Margin Scheme.
In this case, does the client need to charge a sale price plus VAT with the total subject to his usual VAT Flat Rate%?
Many thanks
Replies (4)
Please login or register to join the discussion.
Sale of asset under FRS
HMRC Notice 733, para 15.9 is your reference for this.
The sale of a van where input tax has not been claimed is included within the FRS sales turnover. This applies whether or not the client treats it as a second hand item.
Sale of van
If the van is sold effectively under the second hand scheme, then you will not show any VAT on the invoice. This will suit an unregistered customer.
But, of course the full value is included in the FRS turnover.
What is the difference ...
... between a van or any goods purchased for resale from a non-VAT registered business?
Under FRS at least you are only absorbing the FRS rate, not the full 20% you would absorb if you were on standard VAT.
No doubt the cost of a van from a private sale would be much less than from a dealer anyway!