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Using Xero for second hand car business

Using Xero for second hand car business

Good afternoon

I'm contemplating Xero for a client, who is moving from manual records to cloud based software. Xero support appears only by email, with no telephone support which is in my opinion poor, but hey ho.

Hence my question here. Does anyone know in Xero, how you could enter say a car sale net £4700 vat £300 total £5000 in either the invoice screen or as a journal to get the desired result on the vat return? The vat rates seem a bit inflexible and rigid. I don't wish to post an invoice and credit notes to get the desired result if you get my drift.

 

Many thanks

 

 

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25th Apr 2018 19:45

Post the invoice as two lines. Line one is the cost of the car, which in this case seems to be £3,200, as a zero rated sale. Post the second line as the profit margin, £1,800 VAT inclusive, as standard rated sale, VAT inclusive.

The invoice is an oddity of course but you aren't allowed to give it to the customer anyway

Works in any software, not just Xero

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By NH
26th Apr 2018 11:28

The way we do this is Sage is create a stock code for each vehicle (using the Reg No) and then post all PI and SI for non VAT qual vehicles with zero VAT, then end of month run a profit by stock item report which gives us the figures required to post a VAT only SI to account for the VAT on the Margin.
I know that doesnt help with Xero but I would imagine the method would still work, whichever option you go for is a fudge unless you use specialist software which is very expensive.

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By Pygmy
26th Apr 2018 11:54

See

https://www.accountingweb.co.uk/any-answers/vat-margin-scheme-can-you-us...

By Pygmy 02nd Mar 2018 16:09
It is probably quicker journaling as Lion suggests but I believe that Xero's flexibility allows the possibility of a work-around:

1. Create a single SALES Marginal VAT rate of 16.67%
2. Deal with one car at a time -considering those sold at profit only for marginal VAT
3. Use fact that 1/6 of (Sale price -Purchase price) = 1/6 of Sale Price - 1/6 of Purchase Price

Sale Invoice for vehicle bought at £12000 and sold at £15000 is as follows:

Date of Sale

Sale Price of vehicle 1x£15000 at marginal VAT rate (VAT exclusive) = £17500
Plus -£2500 (No VAT) posted to Marginal VAT Expense Account
=£15000 sale price for vehicle

and for Purchase

Date of Sale

Purchase of vehicle 1x£12000 at Marginal Rate (VAT Exclusive) =£14000

Plus -£2000 at No VAT posted to Marginal VAT expense account
= £12000 paid for vehicle

Marginal VAT = £2500 - £2000 = £500
Marginal VAT expense = -(-£2500) + (-£2000) = £500

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