I was talking to a local used Landie dealer today thinking of trading my defender for a Disco 3, he says because it's a side window conversion and not an original station wagon he would have to put VAT on it to re-sell, so reducing the trade value. Is this correct, I assumed once converted it got over the vat nonsense. He did say to check the reg document and if it states light utility, and that is the case, VAT would apply. Anyone know the facts on this.
VAT on defender side window conversion
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Jongould
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I was under the impression that on a vehicle where VAT has already been paid you do not need to pay it again, I do know that its a minefield and the best people to speak to are HMRC...
Jongould
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Its anything but clear cut, there are lots of ifs and buts, phone HMRC and they will tell yah...
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Optimus Prime
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if the VAT has been paid and not reclaimed, then it will not attract further VAT.
As an example, Mr A buys a defender light utility for work, as a VAT registered business. He (rightly) pays VAT to the supplying dealer. He can then (rightly) claim the VAT back from the government. Usually, this doesn't (although it can) become a payment back, rather than a deduction in the VAT he has to pay in the course of running his business.
He then decided to sell the vehicle on, and to the sale price, he must add VAT, which he passes on to the government. However, the amount of VAT he has to add is less than that he originally paid because the vehicle is now worth less because of depreciation. So he sells the vehicle to Mr B, who again, pays VAT and reclaims it back.
NOW, this carries on until the point where the vehicle is bought by someone (or a company) who is not VAT registered. The have to pay the VAT when the buy the vehicle from Mr B or C or D, but, because they are not VAT registered, cannot claim the VAT back. At that point, the vehicle no longer attracts VAT in any transaction, irrespective of whether the subsequent buyers are VAT registered or not.
When the vehicle is sold, it does not have VAT applied.
(it gets a little more confusing if the vehicle is restored and then the cost of the modifications if carried out by a VAT registered organisation will attact VAT but the original purchase price doesnt).
So, if you didn't pay VAT, or get an invoice which clearly stated the VAT element when you bought it (only if you bought it from a VAT registered organisation or individual), then no further VAT will be payable or chargeable.
As an example, Mr A buys a defender light utility for work, as a VAT registered business. He (rightly) pays VAT to the supplying dealer. He can then (rightly) claim the VAT back from the government. Usually, this doesn't (although it can) become a payment back, rather than a deduction in the VAT he has to pay in the course of running his business.
He then decided to sell the vehicle on, and to the sale price, he must add VAT, which he passes on to the government. However, the amount of VAT he has to add is less than that he originally paid because the vehicle is now worth less because of depreciation. So he sells the vehicle to Mr B, who again, pays VAT and reclaims it back.
NOW, this carries on until the point where the vehicle is bought by someone (or a company) who is not VAT registered. The have to pay the VAT when the buy the vehicle from Mr B or C or D, but, because they are not VAT registered, cannot claim the VAT back. At that point, the vehicle no longer attracts VAT in any transaction, irrespective of whether the subsequent buyers are VAT registered or not.
When the vehicle is sold, it does not have VAT applied.
(it gets a little more confusing if the vehicle is restored and then the cost of the modifications if carried out by a VAT registered organisation will attact VAT but the original purchase price doesnt).
So, if you didn't pay VAT, or get an invoice which clearly stated the VAT element when you bought it (only if you bought it from a VAT registered organisation or individual), then no further VAT will be payable or chargeable.
Optimus Prime
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that is my understanding of it, and how it has worked before I was VAT registered and after I registered.
waldershelf
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It doesn't matter to the trader either way, if he is VAT registered he will pay the VAT on the difference between what he paid for the vehicle and what he sells it for minus expenses. He (or rather the customer) won't have to pay VAT on the whole vehicle unless you (the current owner) claimed the VAT back when you purchased it.
I think thats how it works anyway
HMRC should be able to tell you the current tax liability on the vehicle.
I think thats how it works anyway
HMRC should be able to tell you the current tax liability on the vehicle.
Jongould
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This is how I thought it worked. My last works van had VAT applied as I got it direct from a company who claimed VAT back, I had to pay it but also claimed it back so the next owner will have to pay VAT (well, we will on the sale price anyway).
HMRC will tell you if the vehicle has had VAT paid previously on it and if so it will not need paying again.
Thanks for the info, I will contact HMRC I want to know the facts and go back to that dealer if he's wrong to put him right. I'm no longer interested in the Disco3 now, I thought about it and can't bring myself to part with my Defender, I don't know what possesed me to even think about it, what really bothers me is the depreciation.
waldershelf
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All cars depreciate, Defenders depreciate slower than just about any other car and level out at a higher value where condition determines value irrespective of age than pretty much anything exept exotic cars
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