My husband sells lawn mowers as part of his business. He is about to take a trade in mower against a new mower. The new mower will be sold to a VAT registered business.
What is the VAT position with regards to the trade-in v sale of the new mower and what is the VAT position when the trade-in machine is sold on as secondhand. Does a retail margin scheme apply?
Thanks
Karen
Replies (2)
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Not margin
As the customer is VAT registered, they should account for output tax on the trade in and give your husband a VAT invoice. When the trade in is sold, charge VAT on the sale just like a new machine.
If the customer is not VAT registered, then they can't supply a VAT invoice, so the margin scheme should be used.