This question is for my studies....if you take something out of your own stock for private use and you previously paid Vat on it does the entry now inc VAT as would have already been put through the books at time of purchase?
So...printer bought at 75 + Vat given to daugter...what would my entries be?
Basically HMRC don't allow you to 'take' items out of stock, or even to buy them from stock at cost, you have to buy them at full retail price - which if you're VAT registered will include VAT, as far as I'm aware.
Basically HMRC don't allow you to 'take' items out of stock, or even to buy them from stock at cost, you have to buy them at full retail price - which if you're VAT registered will include VAT, as far as I'm aware.
HTH
Helen
Hi Helen
The cost vs retail charge to yourself is something I have seen mentioned a lot, and I must confess to being confused by it.
I'm not saying it's wrong but as far as I can see, there is no obligation to sell yourself something at more than cost + VAT.
The above link goes as far as giving away an item for nothing (including to yourself)
If any one can throw some difinitive light on the subject, I would appreciate it.
Obviously taking stock/ assets for private use, also needs to be adjusted for for SA purposes but again I would say that there is no requirement to make a profit on the transfer.
Sorry I haven't got a definitive answer but I'd agree with Bill.
It makes sense to me that the selling price of the goods should be the cost to the business of replacing the product in the same condition. I think that last bit is important because it seems unfair to me that HMRC can assume all stock is sold in perfect condition and also it's fair to reflect that a business often sells the same product at a variety of prices across it's customer base.
I could well be wrong but replacement cost seems the most equitable to me.
__________________
Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
I certainly won't be able to throw any definitive light, but can merely explain where I was coming from.
In my SA studies I was always advised that unless you have HMRC 'permission', anything taken from stock had to be accounted for at full retail cost. I appreciate that this will have only been looking at the tax point of view, and as I don't get involved in tax for Ltd companies hadn't really thought about the profit on the transfer! (I did say that I wouldn't be bringing any light to the subject)!
Having looked at the link you gave, there is a section within there that says: "If you make supplies to a business that you're associated with, and you supply goods, services or anything else to them at prices below the open market value, you'll need to contact HM Revenue & Customs (HMRC) to discuss how to account for the VAT correctly." which would seem to imply the same rule applies.
You've certainly made me think about it now though!
