Selling a piece of equipment.... charge vat or not?

[swinny]

After some advice please :

 

Selling my old digger soon..... I am Vat registered.... I bought it off a non vat reg person.... I paid no vat and claimed no vat.....

 

At some point the first purchaser will have paid the vat on the item years ago... its a 2006 machine...

 

Time to sell the digger now.... Wanting 6K ish for it.... Lot more attractive with no vat!

 

My accountant says i should charge vat.... but i say different!! charging vat ontop in my opinion will make the market i sell to a lot smaller.

 

Anyone help or point me in the right direction please?

Edited August 27, 2021 by swinny

[Mick Dempsey]

If you are VAT registered and you sell an item you must charge VAT.

 

I did as you hope to with a chipper, ended up paying the vat out of my own pocket afterwards.

[doobin]

Only option is cash if you want to avoid vat. 

[swinny]

Where you were unable to recover the VAT on the purchase of the car, then the onward sale of this car is VAT exempt, because of the input tax block on acquisition, and therefore no VAT has to be charged on the sale of the car.

Alternatively, if you purchase a car second-hand car that is not VAT qualifying, then there is no VAT on the purchase, and therefore there is no VAT on the sale either. However, if the car is sold on at a profit (highly unlikely!) then you would have to account for VAT on the profit made under the second-hand margin scheme.

Other assets
The usual rule for other asset sales is that if VAT was charged on the purchase of the assets then you will have to charge VAT on the onward sale of those assets.

If the assets were purchased second hand with no VAT charged on the purchase then, as with cars above, no VAT has to be charged on the onward sale, but VAT would be due on the margin made if they are sold on at a profit.

However, in the rare case that assets are purchased brand new from a non VAT registered supplier then the onward sale of those assets would be subject to VAT, because they are not eligible to be dealt with under the second-hand margin scheme.

[kevinjohnsonmbe]

Ideally, you should have entered it into your asset list at purchase price, claimed AIA on the purchase price and devalued it annually. 
 

The current value, as per your asset list, is what you should record as your sale price and your sale price must include VAT which you must pass on to Hector. 
 

 

edit!

 

Just read Swinny’s post. Maybe I’ve got it wrong? But as Mick says, I would have thought you’d have to charge VAT - unless you get a load of scrap to weigh in and record in on asset list as the digger being written off after a mysterious fire - then sell it under the radar?

 

Edited August 27, 2021 by kevinjohnsonmbe

[swinny]

1 minute ago, kevinjohnsonmbe said:

Ideally, you should have entered it into your asset list at purchase price, claimed AIA on the purchase price and devalued it annually. 
 

The current value, as per your asset list, is what you should record as your sale price and your sale price must include VAT which you must pass on to Hector. 

 

Yes thats the TWAT..... Don't like him....

 

Only had the digger a year Kev lol 

[Peasgood]

2 hours ago, kevinjohnsonmbe said:

unless you get a load of scrap to weigh in

And always make sure you charge the scrapyard VAT when you do weigh in.

[trigger_andy]

Get your missus to sell it?

[doobin]

10 hours ago, trigger_andy said:

Get your missus to sell it?

That's just as obvious if you ever get investigated.

 

Basically- whatever you do is fine, unless you get investigated!

[Mick Dempsey]

I mean you could sell it and get the chèque made out to your wife or whatever.

But you have received a tax relief on it when you bought it, it’s on your books as an asset so if they come round they’ll want to see it.

 

Just bang on the VAT, someone will have it anyway and it won’t cost you anything.