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Accounting (Vat) for car sales

  • 19-09-2011 9:21am
    #1
    amn88
    Closed Accounts Posts: 36 ✭


    Just wondering if someone in the motor trade bought a car of a private owner say for 4000 total (trade in or other) and sells it for 5000 vat incl. Ok so you pay 21% vat on 5000 = 867.76 ....... less 21% vat on the 4000 = 694.21 . Vat due 173.54 , is this correct? Someone told me today, that the vat could only be reclaimed on the purchase of the car if you got a vat receipt with it ie you bought it off someone in the trade or an auction etc as these are vat registered.... i dodnt agree with them, am i right can anyone tell me?

    thanks


Comments

  • #2
    paul71
    Registered Users, Registered Users 2 Posts: 3,348 ✭✭✭paul71


    amn88 wrote: »
    Just wondering if someone in the motor trade bought a car of a private owner say for 4000 total (trade in or other) and sells it for 5000 vat incl. Ok so you pay 21% vat on 5000 = 867.76 ....... less 21% vat on the 4000 = 694.21 . Vat due 173.54 , is this correct? Someone told me today, that the vat could only be reclaimed on the purchase of the car if you got a vat receipt with it ie you bought it off someone in the trade or an auction etc as these are vat registered.... i dodnt agree with them, am i right can anyone tell me?

    thanks


    They are wrong and you are correct, this is covered under the EU 7th Vat directive. This allows traders in second hand goods to reclaim a VAT content on items bought second hand from an unregistered person as long as the trader maintains a record and signed receipt from the unregistered person.

    It applies to all second hand goods but is most commonly used in be car dealers, second hand bookshops, and computer game retailers who sell second hand games.


  • #3
    barneystinson
    Registered Users, Registered Users 2 Posts: 4,686 ✭✭✭barneystinson


    paul71 wrote: »
    They are wrong and you are correct, this is covered under the EU 7th Vat directive. This allows traders in second hand goods to reclaim a VAT content on items bought second hand from an unregistered person as long as the trader maintains a record and signed receipt from the unregistered person.

    It applies to all second hand goods but is most commonly used in be car dealers, second hand bookshops, and computer game retailers who sell second hand games.

    +1

    And here's the link to the relevant info on the Revenue website:
    http://www.revenue.ie/en/tax/vat/leaflets/margin-scheme-second-hand-goods.html#section7


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