Buyers Premium and VAT

Second hand car dealer

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Just slightly confused by the information provided and wondering if anyone else has come across VAT shown separately in the buyers premium when dealing with a second hand car dealer.

Example:- The second hand dealer buys a car for £1300. the buyers premium £241.20 (including VAT). Amount detailed for the stock book will be £1541.20

However the VAT on the invoice is shown separately. Purchase price £1300, Buyers Premium £201 and VAT of £40.20. I have read that if the VAT is itemised separately then the input VAT should be reclaimed and that the charges should not be added to the purchase price of the stock book. Therefore stock book cost £1300, expenses of £201 and input VAT reclaimble of £40.20. I may be mistaken but I just need to clarify the wording if anybody who has had experience in this can help.

Thank you in advance

Replies (4)

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paddle steamer
By DJKL
20th May 2024 16:15

Try this 2015 article from Neil Warren, it covers.

https://www.taxadvisermagazine.com/article/margins

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Replying to DJKL:
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By Snoppy76
20th May 2024 16:19

Excellent. Thanks.

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Replying to DJKL:
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By Paul Crowley
20th May 2024 19:24

Brilliant link.
never yet come across the need for considering bad debt, but now I know.
Neil does some good stuff, but now I only see it in taxation magazine.

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RLI
By lionofludesch
22nd May 2024 07:58

WISWTW?

There are two supplies here.

The car and the auction fee.

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