Reclaiming VAT - advice please

[TeaMonsta]

I'm hoping to start selling firewood locally. My potential suppliers have quoted me prices plus VAT (I'm assuming that to be 20%). Am I right in thinking:

 

5% VAT should be applied to the price of the wood that I sell (either £X + VAT or VAT included in total price charged)?

The 20% VAT that I will be charged by the supplier can be reclaimed (if I'm VAT registered)?

 

I've telephoned a local accountant but she was unsure saying that VAT is complicated and not logical much of the time so I thought I'd ask here. I hope you can help and thank you in advance for your advice.

[Brett]

if your selling/buying firewood to trade vat is applied at 20%

when selling/buying to end used vat is applied at 5%

 

you dont really reclaim vat. you have to keep a tally of what you spend in vat and what you earn in vat and you pay the difference.

[TeaMonsta]

Thanks, Brett. I'd assumed I'd be charged 20% VAT by the supplier. That's probably what confused the accountant. So, as an example, if I bought at £100 plus 5% VAT (spent £5 in VAT) and sold at £200 plus 5% VAT (earned £10 in VAT), I'd have to pay £5 to HMRC (£10 earned in VAT minus £5 spent in VAT)?

[waterbuoy]

Nope

 

In the example you give you'd be buying at £100+20% VAT (ie £120) and selling to end consumer at £200 +5% VAT (ie £210) so you would end up reclaiming £10 from HMRC

[gdh]

I'm hoping to start selling firewood locally. My potential suppliers have quoted me prices plus VAT (I'm assuming that to be 20%). Am I right in thinking:

 

5% VAT should be applied to the price of the wood that I sell (either £X + VAT or VAT included in total price charged)?

The 20% VAT that I will be charged by the supplier can be reclaimed (if I'm VAT registered)?

 

I've telephoned a local accountant but she was unsure saying that VAT is complicated and not logical much of the time so I thought I'd ask here. I hope you can help and thank you in advance for your advice.

 

You have got it right. You can claim back the 20% and only pay them the 5 so if you were only selling firewood you would get money coming back to you each quarter.

 

Only exception is if you're selling to someone to sell on again then you need to charge 20% vat.

[TeaMonsta]

Thanks everyone. Makes sense now.

[Justme]

I would not use that accountant lol.

 

Some smaller trade sales are still done at 5%.

 

Not sure on the how, why or when.

[kevinjohnsonmbe]

Ummmmm....... You haven't said if YOU are VAT registered or not. If yes, see above. If no, pay your suppliers invoice as presented and issue your invoices as appropriate, forget VAT.

 

I think......

[skyhuck]

if your selling/buying firewood to trade vat is applied at 20%

when selling/buying to end used vat is applied at 5%

 

you dont really reclaim vat. you have to keep a tally of what you spend in vat and what you earn in vat and you pay the difference.

 

Yes you do!!!

 

I have "reclaimed" many thousands of pound when buying large plant.

[Steve Bullman]

agree with everything, specially the part about not using that accountant!