Vat and reselling query

[Sutton]

4 hours ago, openspaceman said:

may be worth deregistering then as the value of kit you have left on the books will be well written down and that value is what you will have to pay 20% on.

I've been wondering about deregistering. Say my AIA pool is £50k at the end of tax year. Then if I deregister then I'll owe HMCE 20% of that.

 

But if I bought in cordwood over 10+ years @ 20% and sold it processed with 5% on top then that 15% difference (+other expenses) won't add to the AIA pool vat owed after deregistering will it?

[Justme]

8 hours ago, Vedhoggar said:

Ref VAT Notice 700/24 which covers how to apply VAT to delivery services ... if delivery free or cost built in then VAT would be 5% on firewood, if a surcharge for say delivery outside local area or there are different delivery charges base on radius from base then the additional charge for that delivery would be 5% in the case of firewood. If delivery is treated as a supply separate to that of the goods or you deliver someone else's firewood then standard VAT charge 20%. 

 

Those not VAT registered can treat VAT as a taxable loss.

 

 

 

 

 

 

Ok so where does it say to charge 25%?

 

You charge 5% on the wood & 20% on the delivery.

 

Totally different thing.

[GarethM]

One would assume the delivery is say £10 plus vat at 20%, £2.

 

For the sake of argument £100 wood plus vat at 5%, £5.

 

Obviously it all comes down to actual margins, but I guess a large trade discount would apply to the original supplier.

 

Swings and roundabouts, but an accountant would be my 1st port of call. Once prices have been worked out for both vat and not Vat selling.

 

The AIA is on equipment, isn't the tax written down as a percentage over several years on large purchases?.

Edited September 16, 2022 by GarethM

[openspaceman]

2 hours ago, Sutton said:

I've been wondering about deregistering. Say my AIA pool is £50k at the end of tax year. Then if I deregister then I'll owe HMCE 20% of that.

 

But if I bought in cordwood over 10+ years @ 20% and sold it processed with 5% on top then that 15% difference (+other expenses) won't add to the AIA pool vat owed after deregistering will it?

You will need someone better at accountancy than I but 5% of gross sales  verses 20% of inputs  suggests it is better to stay registered if your inputs are more than a fifth of your sales, aside from the current value of your assets, and if you never have outputs chargeable at 20% to private clients.

 

 

[gdh]

If you're already vat registered it should be a simple question. In an average year do you pay or reclaim more?

 

If you're paying and not likely to go over the threshold (85k?) then there's no advantage to being registered 

[Vedhoggar]

5 hours ago, Justme said:

Ok so where does it say to charge 25%?

 

You charge 5% on the wood & 20% on the delivery.

 

Totally different thing.

You are correct, I didn’t put it across correctly in initial posts. It would be 5% on just the firewood and either 0%, 5% or 20% on just the delivery depending on how delivery is treated. Thanks