Weird one. Finance Company & VAT
Client purchases a machine from Belgium circa £40k (paid in Euros).
No vat on invoice - correct.
Client aproaches Finance Company (major bank) and they provided a VAT invoice for £40k + £7k vat @ 17.5%
There is a summary showing Total due £47000
less deposit £17000
Total finance £30000
Client receives £30000 from finance company and is repaying in accordance with the agreement.
I have just spoken to the finance company because I could not understand the £17k "deposit".
The answer was that the deal was in the nature of a "letter of intent" and the deposit would have been paid to the overseas supplier.
When I asked how they could invoice my client for equipment they did not own they said "we have an invoice from client for £30k"
Next question was "is there vat on the invoice?" to which the answer was "no just £30k"
So am I missing something here?
On the face of it the finance company have lent £30k to be repaid with interest.
They have purchased a piece of equipment for £30k and sold it for £40k and have (presumably paid over £7k in VAT. But how on earth do their books balance?
My client has not recorded anything other than the original purchase and the £30k finance in and repayments out. So net his figures are right.
However surely he needs to raise a vat invoice for the sale to the finance company (but in what amount?) and put through the purchase and claim the £7k back.
Sorry it's so long.
Finally assuming the paperwork is correct what is the correct way to deal with the sale/purchase?
Do you have a sale of the asset purchased with loss or profit on disposal and a subsequent purchase at another figure? Or is it correct just to deal with the vat and introduce the finance?
- VAT & Landlords 160 3
- Auto enrolment and husband & Wife companies 387 2
- Extraction of Factory from Trading Company and Leaseback 56 1
- Make an adjustment to profits chargeable to class 4 nic 24 1
- A change from the old Q v NQ debate 490 16
- Share swap 352 11
- Interest Free Loan - Salay Sacrifice? 26 1
- Associated companies - CT small profits relief 234 10
- Cleaners wages at small church -PAYE or self employed ? 309 6
- VAT reports on trade debtors and trade creditors 144 2
- Residential leeting and repairs 79 2
- DOUBLE TAXATION RELIEF BETWEEN A PRIVATE LTD COMPANY AND GREECE (the private Ltd has no employees and its main activity is 227 1
- Entrepreneurs' relief for trustees - receipt of rent 157 4
- Offsetting CIS tax suffered against CT 234 11
- Late P45 79 1
- VAT on motor expenses 936 34
- ideas for a bonus scheme for accountants 512 8
- Why do HMRC have a different FPS liability to the amount I sent? 1,759 23
- another ir35!!!! 1,210 8
- Sage Payroll with 'employees' not having tax or NI deducted 143 2
- Skandia using wrong address 1,554
- Nil Rate Band Trust - index linked debt by way of charge over property 855
- International interest certificate 473
- NOVA 330
- Subby expenses subject to tax & NI? 241
- Can Limited Company Buy Share of Rental Property? 229
- Management expenses for investment company 220
- Bonus Bonds 211
- Have we escaped Gift with Reservation of Benfit & Pre-owned asset charges? - Gift after benefit 198
- Check my logic on this please? 166