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Calculating profit trading under VAT margin scheme

Calculating income tax profit, trading under VAT margin scheme.

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I retail used goods and so operate under the VAT margin scheme.  Therefore I pay VAT on the margin between the purchase and sale price of my items.

My question is, when calculating my profit for income tax purposes, should the VAT that I have collected and paid to HMRC each quarter on those margins, be deducted from my profits?  

It doesn't seem right that I would pay income tax on VAT I've collected for the government, but I'm not sure as I cannot find an answer anywhere.

Thanks for any help.

Replies (3)

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By Tim Vane
18th Jan 2020 21:11

Your accountant will know the correct treatment of expenses and income for your accounts and tax. Just leave it to them and be sure you get the books to them a timely fashion.

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By Skiny
18th Jan 2020 22:10

I thought so too, but I don't see the VAT I have paid through the margin scheme reflected anywhere in what they've sent.

I will of course be asking them after the weekend, but I'm curious now and wondered if anyone knew.

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Replying to Skiny:
RLI
By lionofludesch
19th Jan 2020 09:59

Skiny wrote:

I thought so too, but I don't see the VAT I have paid through the margin scheme reflected anywhere in what they've sent.

I will of course be asking them after the weekend, but I'm curious now and wondered if anyone knew.

Your sales and, indeed, your expenses should be shown net of VAT.

What you have seems correct to me.

But by all means ask the question. It's good that you take an interest and don't just sign off stuff that's put in front of you. Ignore Grumpy Tim and Grumpy JoF.

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