.

kt66 · December 2017

.

thegummy · December 2017

Pretty sure everything you said is correct.

What does this relate to?

daveyh · December 2017

What’s going on with the shop is kind of irrelevant tbh, that’s their problem. As a second hand buyer I’m only interested in about half to two thirds of what I could have bought it for new.

thegummy · December 2017

BTW, if you don't like paying tax on things you buy, you'd hate this...

I ordered some nut files form StewMac in America. Presumably I already paid their own sales tax since the price I paid was the same as someone in America would have paid. Then there was the international shipping which is fair enough.

Then instead of getting it delivered here, I get a note that I have to drive to the sorting office and not only pay the customs tax (which I did expect but still a bit of a stinger if I already paid tax on the item in America) but the Royal Mail were charging me an additional 8 quid on top for no reason other than that I had to pay customs charge!

dbphoto · December 2017

For whatever reason it annoys me when people think that when they have spent £1000 on something for example, £200 of that is VAT.

(It’s not, £166.67 would be the VAT amount assuming the item is at the standard rate of 20%)

The majority of my products are zero VAT rated so I quite enjoy having my return done every quarter as the VAT man gives me money :-)

guitars4you · December 2017

Just as an update on used guitars (equipment) vat is paid by the dealer on the profit - So if he buys it for £600 and sells it for £700 - hence £100 profit then the dealer will pay £16.66 vat - so the profit is now £83.33 This assumes it is a vat registered business

So no vat on the full amount as per new products

TheBigDipper · December 2017

guitars4you said:

Just as an update on used guitars (equipment) vat is paid by the dealer on the profit - So if he buys it for £600 and sells it for £700 - hence £100 profit then the dealer will pay £16.66 vat - so the profit is now £83.33 This assumes it is a vat registered business

So no vat on the full amount as per new products

Can I check my understanding?

The VAT registered business buys a used guitar for £600 from a seller who is not VAT registered. The business then sells it for £700, which includes a 20% VAT charge on the profit element of £83.33 - a VAT charge of £16.66 that the buyer must pay and the seller must pass onto HMRC?

The VAT sales invoice would show a VAT charge of £16.66?

dbphoto · December 2017

When selling under the ‘VAT margin scheme’ only the total cost is shown on any sales invoice if I remember correctly.

(It would be easy to figure out how much profit a VAT registered seller would be making on any second hand items otherwise!)

Sporky · December 2017

thegummy said:

the Royal Mail were charging me an additional 8 quid on top for no reason other than that I had to pay customs charge!

They do the paperwork and they pay the clearance fees in advance so it goes through faster. That's what you're paying them for.

And you wouldn't have paid sales tax in the US. For online orders it's only applied if you're in the same US state as the seller.

TheBigDipper · December 2017

dbphoto said:

When selling under the ‘VAT margin scheme’ only the total cost is shown on any sales invoice if I remember correctly.

(It would be easy to figure out how much profit a VAT registered seller would be making on any second hand items otherwise!)

That was what I was thinking regarding the sellers profit. So they would issue an invoice with just the gross price and no VAT element to a buyer who was not VAT registered. A buyer who was VAT registered would want to offset the VAT paid against VAT collected, so wouldn't they get a proper VAT invoice from the seller?

guitars4you · December 2017

TheBigDipper said:

dbphoto said:

When selling under the ‘VAT margin scheme’ only the total cost is shown on any sales invoice if I remember correctly.

(It would be easy to figure out how much profit a VAT registered seller would be making on any second hand items otherwise!)

That was what I was thinking regarding the sellers profit. So they would issue an invoice with just the gross price and no VAT element to a buyer who was not VAT registered. A buyer who was VAT registered would want to offset the VAT paid against VAT collected, so wouldn't they get a proper VAT invoice from the seller?

that is how it tends to work on used goods - so yes we would invoice you for £700 - technically no vat to reclaim - the dealer pays it effectively on used, so no vat to reclaim for the buyer as such

dbphoto · December 2017

I don’t think so, there is something that deals with that along the lines of SKU info?

skaguitar · December 2017

If I bought a guitar for £1200 from a shop and wanted to sell it for half the price I paid for it I would sell it at £600.. regardless of the VAT....it is half the price I paid for it...if there was no such thing as VAT and I paid £1000 for it and wanted to sell it at half the price I paid I would want £500... people selling 2nd hand goods are ...in my opinion and we all know about those...are within their rights to advertise it as half price as it is half the price they paid..it's also half the price you would pay if you bought the same guitar from a shop as you would have to pay the VAT too..

guitars4you · December 2017

dbphoto said:

I don’t think so, there is something that deals with that along the lines of SKU info?

I can't recall the last time in say 10/15 years that I've sold a used guitar to a customer that is vat registered so had to split the invoice as such - I can check it out though

do you assume then that at £600 cost and £700 sold - that the dealer then shows the sale as £683.34 + 16.66 vat - total £700

guitars4you · December 2017

dbphoto said:

I don’t think so, there is something that deals with that along the lines of SKU info?

What you can’t reclaim

You can’t reclaim VAT for:

goods sold to you under one of the VAT second-hand margin schemes

dbphoto · December 2017

guitars4you said:

dbphoto said:

I don’t think so, there is something that deals with that along the lines of SKU info?

What you can’t reclaim
You can’t reclaim VAT for:
goods sold to you under one of the VAT second-hand margin schemes

That makes sense. I like learning stuff like this.

and ‘unique stockbook number’ is what I was thinking of, not ‘stock keeping unit’

(oh, and when I said I don’t think so I was responding to TheBigDipper, not you)

guitars4you · December 2017

dbphoto said:

guitars4you said:

dbphoto said:

I don’t think so, there is something that deals with that along the lines of SKU info?

What you can’t reclaim
You can’t reclaim VAT for:
goods sold to you under one of the VAT second-hand margin schemes

That makes sense. I like learning stuff like this.

and ‘unique stockbook number’ is what I was thinking of, not ‘stock keeping unit’

I've not read it for years - tend to go on auto pilot as such - so good to refresh as well at my end and update the clarity of it

Gassage · December 2017

guitars4you said:

Just as an update on used guitars (equipment) vat is paid by the dealer on the profit - So if he buys it for £600 and sells it for £700 - hence £100 profit then the dealer will pay £16.66 vat - so the profit is now £83.33 This assumes it is a vat registered business

So no vat on the full amount as per new products

Mark, whilst I know you are correct- 2 points- 1) the number of dealers that used to lie about this is huge 2) am I right in saying you can either do 20% on all, or 20% on profit, but not a mix of both, in one calander year? I may be wrong

mbe · December 2017

Lordy, I hate math (sic).

dbphoto · December 2017

Gassage said:

guitars4you said:

Just as an update on used guitars (equipment) vat is paid by the dealer on the profit - So if he buys it for £600 and sells it for £700 - hence £100 profit then the dealer will pay £16.66 vat - so the profit is now £83.33 This assumes it is a vat registered business

So no vat on the full amount as per new products

Mark, whilst I know you are correct- 2 points- 1) the number of dealers that used to lie about this is huge 2) am I right in saying you can either do 20% on all, or 20% on profit, but not a mix of both, in one calander year? I may be wrong

I don’t think a seller has to use the ‘VAT margin scheme’ if they don’t want to, so I’m guessing if not then they would have to charge VAT on the total, and it would make sense that if they opted in or out it would be per year much like the flat rate scheme versus standard rate?

guitars4you · December 2017

Gassage said:

guitars4you said:

Just as an update on used guitars (equipment) vat is paid by the dealer on the profit - So if he buys it for £600 and sells it for £700 - hence £100 profit then the dealer will pay £16.66 vat - so the profit is now £83.33 This assumes it is a vat registered business

So no vat on the full amount as per new products

Mark, whilst I know you are correct- 2 points- 1) the number of dealers that used to lie about this is huge 2) am I right in saying you can either do 20% on all, or 20% on profit, but not a mix of both, in one calander year? I may be wrong

point 1) I know dealers who have not been aware of the margin scheme until corrected by the vat office and/or accountants - deliberate lying is one thing, ignorance is another - either way the vat office can back date accordingly and fine if required - The 'second hand margin scheme' is applicable to any dealer who is vat registered - a smaller dealer and say a workshop based basis who only sells the odd guitar might well be below the 85K limit and not charge vat

point 2) we can mix both schemes but have to record our purchases accordingly, on a different audit trail, with appropriate vat and sold prices accordingly - Then produce a grand total for 1/4 vat returns and yearly accounts

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What you can’t reclaim

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What you can’t reclaim