Reclaiming VAT - advice please

[TimberCutterDartmoor]

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.

 

Crap accountant.

[skyhuck]

 

If you sell more than you buy in a quarter you will not be receiving money from HMRC

 

If I bought in timber at a cost of £1000+vat(at 20%), I can reclaim the £200 vat back at the end of the quarter.

 

If in the same quarter I sell £3000+vat (at 5%) of logs, I will have collected £150 of vat for HMRC, so they will owe me an additional £50 even before vat on overheads is taken into account.

 

It really is pretty simple

[TimberCutterDartmoor]

If I bought in timber at a cost of £1000+vat(at 20%), I can reclaim the £200 vat back at the end of the quarter.

 

If in the same quarter I sell £3000+vat (at 5%) of logs, I will have collected £150 of vat for HMRC, so they will owe me an additional £50 even before vat on overheads is taken into account.

 

It really is pretty simple

 

This.

[Justme]

Your previous comment was all Vat returns will be a reclaim

 

Hence my comment

 

 

That would then just depend on how you run your business. Buy all your stock in one season & sell it in another will be very different to buy & sell within a short time frame.

 

When i did firewood & was Vat registered every return was a refund. Even though the big purchases were in one season there was always enough other purchases to cover more than the sales.

 

That & planning when to make the bigger purchases.

Edited March 26, 2017 by Justme

[Justme]

I cant see how you lot are arriving at these figures. Assuming buying in timber with 20% vat attached and selling with @5% it would depend on the mark up and running expenses as to what was claimed back. If you charged 3x the purchased price for the end product with no overheads there would be nill to reclaim.

 

10 ton of timber bought in @ £50 a ton will have £100 worth of vat attached to it

 

If that timber made 30 loads @ £65 + 5% vat delivered its virtually a nil balance on the timber side of things with the exception of reclaimable/unreclaimable ( dependant on VAT scheme your in ) costs.

 

Bob

 

 

10 tonnes would never return (30 x £65) £1950 in sales.

 

Not round here any way.

[gdh]

We tend to sell more than we buy in during the winter but we're only selling at twice what we pay for timber so we get a refund every quarter. I doubt many people doing firewood will pay vat in a quarter because you would normally buy in during good sales periods anyway.

[better dayz]

If I bought in timber at a cost of £1000+vat(at 20%), I can reclaim the £200 vat back at the end of the quarter.

 

If in the same quarter I sell £3000+vat (at 5%) of logs, I will have collected £150 of vat for HMRC, so they will owe me an additional £50 even before vat on overheads is taken into account.

 

It really is pretty simple

 

Say £35000 worth of sales in a quarter Oct Nov Dec

 

Buy in circa £6000 worth of diesel for the delivery vehicle

 

Your not gonna get a repayment from HMRC

 

Pretty simples really

[gdh]

Say £35000 worth of sales in a quarter Oct Nov Dec

 

Buy in circa £6000 worth of diesel for the delivery vehicle

 

Your not gonna get a repayment from HMRC

 

Pretty simples really

 

It sounds like a lot but that's only £1750 of vat on sales so £550 after your diesel figures. 550 isn't much to find, it's less than the vat on 50 tons of wood (you would need a lot more than that for those sales) and there's plenty of other costs in firewood production.

[skyhuck]

My point is that not every quarter will always see a payment from hmrc unlike what's being suggested by others

 

Except thats not what you said, you called "utter bollocks" the statement that log sales would need to be at least 4x the value of timber purchases before vat would need to be paid to HMRC.

 

Your now changing your tune.

[better dayz]

Your previous comment was all Vat returns will be a reclaim

 

Hence my comment

 

Except thats not what you said, you called "utter bollocks" the statement that log sales would need to be at least 4x the value of timber purchases before vat would need to be paid to HMRC.

 

Your now changing your tune.

 

No tune change