Tax Question?

[devonbrion1998]

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]

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]

Is there VAT on firewood - Just askin' ?

 

[gatepost]

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]

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

 

[An Gof]

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

Less than the implications to your bottom line profit

 

[7610 super q]

Less than the implications to your bottom line profit

Not necessarily, good breeding stock always sells well.

 

[livestock 1]

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

 

[devonbrion1998]

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]

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]

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]

Is there VAT on firewood - Just askin' ?

5%.
officially.....

 

[Bongodog]

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]

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]

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]

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]

Is there VAT on firewood - Just askin' ?

5%

 

[Rowland]

5%

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

 

[Kidds]

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]

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