VAT issue on sale of the fixed asset

Da11

Hi could anyone clarify the VAT issue on sale of the fixed asset?

VAT registered business - a builder buys a commercial jeep from a private individual for € 4000 . There is no VAT in the purchase price because the vehicle is purchased from a not registered individual.
A year later the jeep is sold ( other jeep purchased) for € 3,900. Does the builder has to charge 23% VAT on sale??

Thank You in advance

thegolfer

Yes VAT should be charged on the sale.

Da11

thegolfer wrote: »

Yes VAT should be charged on the sale.

Thank You for the reply!

Would this also apply on the sale of the private car , which was partially used for the business and the portion of the capital allowances were claimed on the car?

Thank You again

Marcusm

Google Margin scheme and see if you qualify!

Da11

Marcusm wrote: »

Google Margin scheme and see if you qualify!

You have to be an accountable dealer to the operate margin scheme is that correct? So your trade should be the sale of the cars? So for the tiler it cannot be applied am I correct?

Thank You!

Da11

thegolfer wrote: »

Yes VAT should be charged on the sale.

You are actually wrong

thegolfer

Da11 wrote: »

You are actually wrong

Where have I gone wrong?

Lockedout2

I checked this previously can't find the reference but where a registered person bought a motor vehicle from an unregistered person there was no Vat on the subsequent sale.

thegolfer

I'm using the Revenue guidance on this here.

Manual: VAT and VRT on transactions involving Motor Vehicles

34. Motor vehicles supplied by traders who are not motor dealers

Ordinary VAT-registered traders who are not motor dealers may acquire motor
vehicles (such as vans, trucks and company cars) for their own business use, and
which they later re-sell. These vehicles are not acquired as stock-in-trade, but for the
purpose of carrying on the normal activities of the business.

If the trader was entitled to recover VAT on the acquisition of the vehicle (see
Recovery of Tax on the Purchase of Motor Vehicles ) then the subsequent resale of
the vehicle is liable to VAT on the full amount received for the vehicle.

If the trader was not entitled to recover VAT on the acquisition of the vehicle, then the
subsequent sale of the vehicle is not liable to VAT.

This applies generally to nondeductible vehicles, such as passenger motorcars.

However, it also applies where a VAT-registered trader is re-selling a commercial vehicle
that he or she purchased at a time prior to registration for VAT (e.g. the trader was
below the turnover threshold for registration at the time of purchase).
In this case, the trader may be required to show that he or she did not recover VAT on the original purchase.


My reading of the piece in italics would be, purchase and sell a passenger motorcar no VAT on sale..
The underlined bit applies to the passenger motorcars, non-deductible vehicles, and not commercial vehicles.

Thus the sale of a commercial vehicle, deductible vehicle, would be exposed to VAT, is my reading.

I responded in respect of the commercial vehicle only and not passenger motorcar.

duffysfarm

I would have thought the golfer is correct and vat should be charges. May not seem fair but that's tax for you!

Da11

as the company was not charged VAT on the purchase of the vehicle, then the sale of the vehicle is not liable to VAT.