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Output Vat Charged but zero Input Vat

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How would VAT be treated for a business

1. Which charges Output VAT but there is no Input VAT. (buying goods from walk in suppliers, e.g scrap metal)

2. Which charges Output VAT but very little Input VAT.

Replies much appreciated.

Replies (9)

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By WhichTyler
17th Apr 2017 07:25

Like any other business. Liability to charge output tax doesn't depend on how much input tax there is...

Thanks (1)
Scalloway Castle
By scalloway
17th Apr 2017 09:15

Option 2 applies, for example, in catering. The main costs there are food (Zero rated), and staff (outside the scope of VAT). Meals supplied will have 20% VAT charged on them.

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Replying to scalloway:
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By mominnz
17th Apr 2017 09:20

Actually i read somewhere maybe i didn't understand fully that if you have more output VAT and no input VAT as for the case which is in question, you would have to pay the difference.
The scenario is:
Selling scarp metal to a company and charging VAT on invoices.
Buying Scrap from local tradesmen or general public.
Any suggestions.

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chips_at_mattersey
By Les Howard
17th Apr 2017 09:28

Are the goods second-hand, and therefore eligible for the margin scheme? Or global accounting. If so, then you need to check the rules for documentation.

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Replying to leshoward:
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By mominnz
17th Apr 2017 09:32

The goods are scrap metal from run down properties and being sold to me from local residents and tradesmen and builders.

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Replying to mominnz:
Scalloway Castle
By scalloway
17th Apr 2017 10:02

The records you need to keep if you want to use a margin scheme for VAT are here.

https://www.gov.uk/vat-margin-schemes/keeping-records

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By Jdopus
17th Apr 2017 10:34

I would immediately register this client for the flat rate scheme provided they're within the criteria. It should save them from having to pay an extremely large VAT bill.

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Online Accountant
By Linton Online Accountants Limited
17th Apr 2017 11:47

I think either the flat rate scheme or the margin scheme could work. The documentation you require for the margin scheme may be a bit onerous for this type of business though so the flat rate scheme may suit you better. Read up on them both before you decide.

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Replying to fawltybasil2575:
RLI
By lionofludesch
17th Apr 2017 15:56

I agree with Basil.

Margin schemes only work where neither the trader's supplier NOR his customer are VAT registered.

Except for cars, which are an entirely different ball game.

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