VAT on a used tractor.

[Tibbo]

Just looking for a bit of advice on this. I’m looking at a used tractor 20 years old, to use at a stables. I’m not VAT registered. Is the VAT 20% on the tractor.
So if the cost was £4000
The total including VAT would be £4800

Thanks

 

[john432]

Yes that's correct , any Vat registered business would have to charge you Vat, on the other hand if you found a tractor being sold by a private individual, none registered, very often it would be sold at a premium due to the perceived saving .

 

[Tibbo]

Yes that's correct , any Vat registered business would have to charge you Vat, on the other hand if you found a tractor being sold by a private individual, none registered, very often it would be sold at a premium due to the perceived saving .

That’s grand thanks. I thought that would be the case but alway good to check

 

[Highland Mule]

Yes that's correct , any Vat registered business would have to charge you Vat, on the other hand if you found a tractor being sold by a private individual, none registered, very often it would be sold at a premium due to the perceived saving .

It's my understanding that if the person who's selling it is VAT registered, but didn't get charged VAT when they bought it, they don't have to charge it when they sell it. I bought a trailer a few years ago without VAT, then sold it earlier this year without charging VAT.

Best always to check with the seller what the position is, if it's going to make a difference to you.

 

[Dry Rot]

It's my understanding that if the person who's selling it is VAT registered, but didn't get charged VAT when they bought it, they don't have to charge it when they sell it. I bought a trailer a few years ago without VAT, then sold it earlier this year without charging VAT.

Best always to check with the seller what the position is, if it's going to make a difference to you.

I think that's correct, unless the seller made a profit. Then VAT is charged on the difference. I think you can also reclaim if you sold at a loss (assuming you are VAT registered), but phone the VAT office. Or look on their web site.

 

[john432]

Ok, now it does get complicated. So if I was to buy say a chainsaw off eBay. With no mention of Vat, give it a service, and then sell it on , would I charge Vat or not?

 

[Highland Mule]

Ok, now it does get complicated. So if I was to buy say a chainsaw off eBay. With no mention of Vat, give it a service, and then sell it on , would I charge Vat or not?

You'd probably run under the VAT margin scheme. But you'd do well to speak to an accountant if you were planning doing that.

 

[Kidds]

Ok, now it does get complicated. So if I was to buy say a chainsaw off eBay. With no mention of Vat, give it a service, and then sell it on , would I charge Vat or not?

and declare the profit as earnings too for income tax purposes.

 

[Exfarmer]

It's my understanding that if the person who's selling it is VAT registered, but didn't get charged VAT when they bought it, they don't have to charge it when they sell it. I bought a trailer a few years ago without VAT, then sold it earlier this year without charging VAT.

Best always to check with the seller what the position is, if it's going to make a difference to you.

No that is not right.! If you are VAT registered you must charge VAT on your sales full stop!
The fact nobody has pickedit up is irrelevant.

 

[Highland Mule]

No that is not right.! If you are VAT registered you must charge VAT on your sales full stop!
The fact nobody has pickedit up is irrelevant.

Sorry, but I checked at the time and again today. Under the vat margin scheme, I don’t need to charge any vat.

Edit, obviously I would if I made a profit, under the margin scheme, but my experience was of a depreciating asset.

 

[Exfarmer]

Ok, now it does get complicated. So if I was to buy say a chainsaw off eBay. With no mention of Vat, give it a service, and then sell it on , would I charge Vat or not?

Any body who is VAT registered must harge VAT on sales unless they are a car dealer and can charge VAT on margin

 

[Highland Mule]

Any body who is VAT registered must harge VAT on sales unless they are a car dealer and can charge VAT on margin

Not true. I’ve just checked again.

“If the assets were purchased second hand with no VAT charged on the purchase then, as with cars above, no VAT has to be charged on the onward sale, but VAT would be due on the margin made if they are sold on at a profit.”

When do I have to declare VAT on the sale of an asset? - KRW ACCOUNTANTS

KRW Accountants are a firm of Chartered Accountants and Chartered Tax Advisers who enjoy helping businesses to grow and minimise their tax liabilities

www.krwaccountants.co.uk

 

[Exfarmer]

Not true. I’ve just checked again.

“If the assets were purchased second hand with no VAT charged on the purchase then, as with cars above, no VAT has to be charged on the onward sale, but VAT would be due on the margin made if they are sold on at a profit.”

When do I have to declare VAT on the sale of an asset? - KRW ACCOUNTANTS

KRW Accountants are a firm of Chartered Accountants and Chartered Tax Advisers who enjoy helping businesses to grow and minimise their tax liabilities

www.krwaccountants.co.uk

That may be your interpretation, I would say beware. If it quacks, its a duck.
the margin sheme was set up specifically for certain groups such as car And art dealers dealers , I would be very wary of selling a second hand chsin saw using it!

 

[hagar]

Agree with highland mule,
bought a 2nd hand hilux pick up years ago and when I came to sell it privately accountant said if you didn't pay vat you don't charge it.

Not true. I’ve just checked again.

“If the assets were purchased second hand with no VAT charged on the purchase then, as with cars above, no VAT has to be charged on the onward sale, but VAT would be due on the margin made if they are sold on at a profit.”

When do I have to declare VAT on the sale of an asset? - KRW ACCOUNTANTS

KRW Accountants are a firm of Chartered Accountants and Chartered Tax Advisers who enjoy helping businesses to grow and minimise their tax liabilities

www.krwaccountants.co.uk

 

[Cowabunga]

Ok, now it does get complicated. So if I was to buy say a chainsaw off eBay. With no mention of Vat, give it a service, and then sell it on , would I charge Vat or not?

No.

 

[pellow]

My accountant told me if I’m VAT registered I have to charge VAT on the sale whoever it’s sold too, this was when I sold an MF 165 purchased without VAT

 

[Highland Mule]

That may be your interpretation, I would say beware. If it quacks, its a duck.
the margin sheme was set up specifically for certain groups such as car And art dealers dealers , I would be very wary of selling a second hand chsin saw using it!

Agree with highland mule,
bought a 2nd hand hilux pick up years ago and when I came to sell it privately accountant said if you didn't pay vat you don't charge it.

In my case, it was a 16’ flatbed trailer

No.

I’d say they should pay vat on the profit margin, if they make a profit.

 

[Cowabunga]

That may be your interpretation, I would say beware. If it quacks, its a duck.
the margin sheme was set up specifically for certain groups such as car And art dealers dealers , I would be very wary of selling a second hand chsin saw using it!

If the original purchaser [or the subsequent ones] was not VAT registered and therefore did not reclaim the VAT, then the tax on that thing would be discharged and when it was sold on, no VAT would be charged and the second owner would buy it free of VAT. If the second owner was a trader, he would sell it on with no VAT but would have to pay HMRC VAT on the uplift in price.

It's not quite that simple, but that is the principle that's used.

 

[john432]

So what happens (hypothetically) if a farm was to sell a vintage tractor that was bought say in the 1960's, before Vat , and was now worth £5000, six times the purchased price. Vat or not on the sale.

 

[Cowabunga]

My accountant told me if I’m VAT registered I have to charge VAT on the sale whoever it’s sold too, this was when I sold an MF 165 purchased without VAT

I do not believe that to be correct. It would be exempt. If the last owner was not VAT registered and did not claim it back, that's the consumer tax done and dusted.