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VAT under the margin scheme

Is VAT to be charged (and reclaimed) by the buyer if new goods are part exchanged

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Client (fully VAT registered) bought a violin bow from a dealer and was invoiced and charged VAT at the full rate. This was never used and is now to be part exchanged by the same dealer for a new one, again with VAT. Should a) my client charge VAT (I think yes) and b) should the dealer be able to recover it ? Dealer prepared to pay for the bow but without VAT. About £200 at stake.

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RLI
By lionofludesch
24th Sep 2019 13:21

If the client is VAT registered, of course he should charge VAT on the sale of the bow, along with any arrows.

It's no different to buying a van with a part exchange.

The margin scheme is not at issue here - unless there's more to tell us.

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By sammerchant
24th Sep 2019 14:08

I wondered why the dealer is being so resistant to being charged VAT on the bow being part-exchanged? Is he not going to be able to claim it back if he is on the margin scheme?

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RLI
By lionofludesch
24th Sep 2019 14:13

Probably not used to dealing with VAT registered folk.

He doesn't have to use the margin scheme for everything and, indeed, he shouldn't use it for stuff he's bought with VAT on.

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