Vat on used vehicles - The Book-keepers Forum (UK)

pmcclure · Veteran Member

Vat on used vehicles

kjmcculloch · Guru

If the seller is VAT registered then VAT will be added when you buy a used car at the current rate.

If the seller isn't VAT registered it wont. So buying from a garage you'll probably pay VAT, buying it from the guy down the road, you probably wont.

farmergiles · Veteran Member

kjmcculloch wrote:

If the seller is VAT registered then VAT will be added when you buy a used car at the current rate.

If the seller isn't VAT registered it wont. So buying from a garage you'll probably pay VAT, buying it from the guy down the road, you probably wont.

I assume that you are referring to a trader who is vat registered. If so, then the vat is worked out at 3/23 of the profit. The trader doesn't physically add vat to the selling price, he sells at what ever price he can get and then calculates the vat on the profit, as above.

Davey · Veteran Member

If your querry relates to a dealers who buys and sell used Vehicles. Then the Company should
keep a USED VEHICLE STOCK BOOK. From the Stock Book take the Sale Price deduct the Cost
price then multiply the difference by 3/23 for 15 % . Make sure the Registration Numbers Match
up of the Vehicles.

pmcclure · Veteran Member

Lets say dealer buys vehicle for £1000.00.
Sells at £1500.00.
Profit £500.00

Vat on profit £65.22

Could some tell me roughly what journals I would need to post.

Thanks

Peter

Davey · Veteran Member

If the bookeeping is relating to a Dealership then treat the Bookkeeping postings as normal
trade ie Post the Vehilce Bought to PURCHASES £ 869.57 VAT 130.43 GROSS £ 1000
Post the Vehicle Sale to SALES £ 1304.35 VAT 195.65 GROSS £ 1500

USE THE SALES AND PURCHASES REGISTER TO DO THE POSTINGS.

pmcclure · Veteran Member

Sorry not to sure were you get the VAT amounts of £130.43 and £195.65. I thought you only paid VAT on the £500 profit?

Peter

kjmcculloch · Guru

Vat ?s calculated on the full sale amount ?t has noth?ng to do w?th prof?t.

If the dealer bought a car from a vat reg?stered bus?ness then they could cla?m the purchase vat back.

Davey · Veteran Member

Take the Output tax of £ 195.65 less £ 130.43 = £ 65.22 Leaving Vat owing to HMRC on the
above transaction. I thought you were intending to input your data onto computer. It is the
net figure which gives you profit therefore your profit on this sale would have been £ 500.00
less vat 65.22 Giving you a net figure of £ 434.78 Profit on this sale.

pmcclure · Veteran Member

Now I understand.

Kris have you got your keyboard set up properly? i is printed as ?

Thanks for the replies

Peter