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?
- Deleted question? 726 19
- Accounts Question 91 4
- What are options for non CA firm 3,168 67
- Do I need a smartphone? 1,933 69
- MAAT vs ACCA 695 13
- pretty multi rainbow -coloured client spreadsheets 1,390 24
- Do I need to report this to SOCA 3,919 46
- Have you staged yet for auto enrolment? 646 3
- Free-standing washing machine - unfurnished lettings 433 4
- VAT Return Errors 171 2
- Adjustment to previous self assessments 120 5
- inflation rate year on year 146 3
- Yorkshire Day 599 38
- Company valuation for IHT purposes 184 4
- Principal Private Residence relief on two semis knocked together 180 4
- Subcontractor and CIS Deductions made by Contractor 379 16
- Entrepreneurs relief sale of business to two different buyers?? 146 3
- SMP reclaimable by employer 292 7
- Agent help line - long queues? 237 4
- the umbrella scheme for PAYE 153 1
- Cancelled 468
- Cancelled 386
- SAGE Payroll Data for Import to MS Dynamics AX 375
- Probiz 356
- Phishing emails purporting to be from CIPFA? 261
- Is this UK incapacity benefit taxable in UK or Jersey? 236
- Another HMRC computer glitch? 230
- More spam 183
- Does anyone have SCI unit contact details? 162
- Employee Benefit Trust 152