VAT on Van sold under VAT FRS when no VAT claimed on purchase

VAT on Van sold under VAT FRS when no VAT...

Didn't find your answer?

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.

chips_at_mattersey
By Les Howard
24th Jan 2014 10:50

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.

Thanks (1)
chips_at_mattersey
By Les Howard
24th Jan 2014 11:42

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.

Thanks (0)
Replying to Paul Scholes:
avatar
By Elgin
24th Jan 2014 11:53

Thanks Les.

I thought that the margin scheme could not be use with the FRS or have I misunderstood?

 

Thanks (0)
avatar
By User deleted
24th Jan 2014 13:01

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!

Thanks (0)