Tax Question?

devonbrion1998 · Nov 10, 2019

Hi All,
My question is goods for resale, I have bought a large amount of firewood in the last few years
and we always sell it
so will this year's outlay come directly off my gross profit for the year?
Thanks

Suffolk Serf · Nov 10, 2019

You will have laid out money for the wood, and therefore have a lower end of year bank balance, however, the wood in stock should be in your end of year valuation, at cost (not resale value).
Therefore, the profit or loss for the year will be a reflection of the increase or decrease of cash in the bank (or borrowings) and the increase or decrease in the value of wood in stock over the year.
I'm not any sort of accountant by the way, so could be wrong!

Courier · Nov 10, 2019

Is there VAT on firewood - Just askin' ?

gatepost · Nov 10, 2019

as above, what you have bought and sold again within your tax year will be reflected in your profit and loss account, the difference in purchase plus costs of turning into and delivering out as firewood will be profit however if you say bought 10 tons and only sold 5 within the year will mean that you have 5 tons at cost price on your balance sheet in other words like cash in the bank. hope that helps, sort of!

7610 super q · Nov 10, 2019

What are the tax implications of woodworm eating 50% of your stock ?

An Gof · Nov 10, 2019

7610 super q said:
What are the tax implications of woodworm eating 50% of your stock ?

Less than the implications to your bottom line profit

7610 super q · Nov 10, 2019

An Gof said:
Less than the implications to your bottom line profit

Not necessarily, good breeding stock always sells well.

livestock 1 · Nov 10, 2019

I’m sure ALL firewood that is bought and sold for cash goes through the books especially when it ends up in smoke ?

devonbrion1998 · Nov 10, 2019

Thanks, seems to be in line with what the wife is saying
I have never really held any stock before, I will give all the figures to my accountant but wanted to know what I am up against

devonbrion1998 · Nov 10, 2019

livestock 1 said:
I’m sure ALL firewood that is bought and sold for cash goes through the books especially when it ends up in smoke ?

Ha yeh I'm sure, but not, in this case, I have some scary invoices from the forestry company.

livestock 1 · Nov 10, 2019

devonbrion1998 said:
Ha yeh I'm sure, but not, in this case, I have some scary invoices from the forestry company.

Yes I’m thinking out loud.

delilah · Nov 10, 2019

Courier said:
Is there VAT on firewood - Just askin' ?

5%.
officially.....

Bongodog · Nov 10, 2019

delilah said:
5%.
officially.....

Not quite correct, when you buy the wood, if it comes from a VAT registered supplier it has 20% (standard rate) on it. When you sell it, if it goes to a domestic user it has 5% (reduced rate) on it.

devonbrion1998 · Nov 10, 2019

7610 super q said:
What are the tax implications of woodworm eating 50% of your stock ?

Vat is an odd one as well, I get charged at 20% but you can only charge 5% retail so me being none vat I have to take the loss of the whole 20%

delilah · Nov 10, 2019

devonbrion1998 said:
Vat is an odd one as well, I get charged at 20% but you can only charge 5% retail so me being none vat I have to take the loss of the whole 20%

is it not worth your while voluntarily registering ? it's a rare farming business that comes out the wrong side on being vat registered.

Rowland · Nov 10, 2019

Bongodog said:
Not quite correct, when you buy the wood, if it comes from a VAT registered supplier it has 20% (standard rate) on it. When you sell it, if it goes to a domestic user it has 5% (reduced rate) on it.

Depends on weather you are the “end” user if you are then it’s 5% if it’s for resale it 20%

Kidds · Nov 10, 2019

Courier said:
Is there VAT on firewood - Just askin' ?

5%

Rowland · Nov 10, 2019

Kidds said:
5%

Its 5% if burn it as the end user for your heating.
If not its 20%

Kidds · Nov 10, 2019

Rowland said:
Its 5% if burn it as the end user for your heating.
If not its 20%

Sorry, I somehow missed half the previous posts

renewablejohn · Nov 10, 2019

Not the most tax efficient way of running a firewood business.

Tax Question?

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