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Motor trade vat/tax calculations

  • 03-10-2011 1:25pm
    #1
    amn88
    Closed Accounts Posts: 36 ✭


    ok a question on calculating taxes for someone in the motor trade: (any help appreciated) I imported a car from england and this is what it cost me:

    €
    Bmw 9784
    Expenses:
    Diesel 70
    Car hire 65
    Hotel 42
    Airport charge 12.50
    Bus 10
    Dinner 40
    Service 60
    Flight 37
    Boat 150
    Total 486.50
    cost of car €10218.50

    Plus vrt 2562
    €12,780.50


    All of the above are the euro equivalent even though most were paid for in england with sterling

    I now am selling the car for 14,000 (incl vrt 2,500)plus a trade in which i am allowing 1000 for so basically 15,000 (in accounting terms as the trade in is treated as a seperate transaction)
    i now have made 2219.50 after everything has being allowed...

    My question is If i was in the motor trade and in the eyes of the revenue, how many of the above costs would be allowed for and how much vat would i pay and tax on profits?

    The way i look at is I would have to pay 21% vat on the 15,000 = 2603.31
    less the vat i paid for the car (10,218.50 or 9784 ?) if 10218.50 then 1773.4 which leaves 829.91

    Then I treat the trade in as another purchase at €1000 which includes vat at 173.55 . which is taken off the vat paid on the sale of this trade in down the road?

    OR

    Sale 12,500
    less vat 2603.31
    10330.58


    Purchases: 9784
    Less vat 1698.05
    8085.95
    Gross Profit 2244.63

    Expenses:

    cost of travel etc 486.50
    incl vat
    486.5
     Net Profit 1758.13

    Tax 20%(as a sole trade?) 351.63
    Tax as a ltd co. 12.5% 219.77

    Sole trader Profit 1538.36

    will i get the vat back on the on the 486.50 if i have the receipts ? If so i can allow 84.43 that i will be able to reclaim so you could say 1622.79.

    So basically the difference in being registerd with revenue and doing everything by the book is 2219.50 - 1622.79 = 596.71 frown.gif

    I am not an accountant and have never dealt with accounts since my junior cert business module so please correct me on any of my mistakes above. I think I remember something about having a seperate vat account? If i was to start trading in this business is there a more simple way of accounting for all sales/purchases/expenses than above?

    I am also presuing in the above profit calculation that i sell the trade in at €1000 profit after all taxes etc.


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