Funding my first chipper

[kimtree]

sorry not much of a picture takerer .Did get someone to do video of the grapple saw but for some reason on my phone they are the  right way up but on the computer there all sideways. computer is too old and cant get a program for rotating videos

[Mark Bolam]

Could you not head over to Queensland for a weekend and upload the video there?

[Matthew Storrs]

On 20/05/2018 at 20:48, PeteB said:

Surely VAT registration means that while the tax is chargeable on all your sales, the amount that you pay in your purchases is reclaimed against that! Being unregistered and selling stuff isn't a way out of paying or charging value added tax?

This has me confused. When I said about the 17k digger (new from a dealer) I’d have to pay VAT on top of this of £3400 and not being registered it is money il never see back. My point to the OP was that if he was to buy a tidy used chipper from someone who wasn’t VAT registered then he’d save a fair wack.

Also if you have to use finance generally you have to pay the VAT up front leaving you with a much smaller deposit and larger repayments.

[kimtree]

13 hours ago, Mark Bolam said:

Could you not head over to Queensland for a weekend and upload the video there?

i could but would still need a ten year old to do it for me .LOL

[Inoff the Red]

17 hours ago, Matthew Storrs said:

This has me confused. When I said about the 17k digger (new from a dealer) I’d have to pay VAT on top of this of £3400 and not being registered it is money il never see back. My point to the OP was that if he was to buy a tidy used chipper from someone who wasn’t VAT registered then he’d save a fair wack.

Also if you have to use finance generally you have to pay the VAT up front leaving you with a much smaller deposit and larger repayments.

Firstly, if you are not vat registered and pay £20,400 for a piece of kit (being £17,000 plus £3,400vat ), then if you are not vat registered you cannot offset the vat paid against vat payable on your sales. I understand what you mean about that vat "being money you will never see again" however, don't forget that for the purposes of claiming your annual investment allowance/capital allowances, the base cost of the machine is £20,400 not £17,000 so, for a 40% tax payer your tax liability will be lower. How much lower depends on whether you are paying tax at 20% or 40%. 

 

As for buying a second hand chipper from someone that is not vat registered, the reality is that the price of second hand equipment is determined by the market and not by someone's vat status. 

 

[Matthew Storrs]

2 hours ago, Inoff the Red said:

Firstly, if you are not vat registered and pay £20,400 for a piece of kit (being £17,000 plus £3,400vat ), then if you are not vat registered you cannot offset the vat paid against vat payable on your sales. I understand what you mean about that vat "being money you will never see again" however, don't forget that for the purposes of claiming your annual investment allowance/capital allowances, the base cost of the machine is £20,400 not £17,000 so, for a 40% tax payer your tax liability will be lower. How much lower depends on whether you are paying tax at 20% or 40%. 

 

As for buying a second hand chipper from someone that is not vat registered, the reality is that the price of second hand equipment is determined by the market and not by someone's vat status. 

 

Yes, I do get all your points. And the market may dictate how much you can sell a chipper/digger for, but VAT has still got to be added on this if your registered or buying from a dealer.

And even though I can put the VAT against AIA allowance I’d still prefer the £3400 to be in my bank so I can buy another non VAT item.

 

That all being said- Iv done the calculations over and over again and certainly with diggers and I’d imagine chippers too, given the decent resale value the cost per machine hour tends to work out better buying new vs a used item- particularly if you plan on keeping the machine for 5 years plus.

[Inoff the Red]

1 hour ago, Matthew Storrs said:

Yes, I do get all your points. And the market may dictate how much you can sell a chipper/digger for, but VAT has still got to be added on this if your registered or buying from a dealer.

Yes but if a dealer is selling a second hand piece of kit for £10k including vat, a private seller with the same piece of kit will still want close to £10k for the same item so you still end up paying broadly the same amount for the item.