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Post Info TOPIC: Used car sales on margin scheme
Spinner


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Used car sales on margin scheme
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Hello, I have a new client who sells used cars and is on the margin scheme for his VAT returns. He has been told previously that he could include the VAT he paid on purchases of cars and then also put the same cars VAT on when sold under the margin scheme. He might not always sell the cars in the same quarter and the last bookkeeper told him this was fine to do! Am I right in thinking this would be wrong? I think he may havebeen misinformed, but want to be sure before I go to him. TIA



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leshoward


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If he paid VAT on the purchase of a used car, he cannot include that car in the margin scheme. It is a Qualifying Car; he should claim input tax, and then account for output tax on the full selling price.
And, do refer him to my friends at Lawdata (lawdata.co.uk/design/shop-2/) for invoices and stock books, etc.

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Spinner


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Oh, so any cars that have purchase VAT have to be treated separately, as a 'normal' purchase and sale?

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leshoward


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Correct.

And, of course, input tax can be claimed at the time of purchase, so there is a cash flow benefit compared to using the margin scheme.

 



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Spinner


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Perfect! Thank you so much!

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