VAT Invoice?

Baffled

Just wondering, Im trading in a commercial van and the garage has asked me if I have a VAT invoice. Now it was originally bought through a business, but I dunno what a VAT invoice looks like or where i'd even find it.

Why do they want this? Is there advantages/disadvantages of having one?

kluivert

Yes this is correct, a vat invoice is required only if you yourself are vat registered. Or if the van is property of the company, then the company must be vat registered.

The gargae is going to claim back the vat on the purchase of the van, like you would if you where to buy a van from them.

You must charge 21% vat on the gross amount (amount before vat is charged). The trade in is effective a sale of the van to them. They will issue you a invoice for the vehicle that you purchase from them and if you are vat registered then you can claim that vat back as well.

A vat invoice is an invoice that you raise and give to your customers for work that you have done for them, it must contain your vat reg no for it to be a vat invoice.

I am a trainee accountant and i have seen so many people claiming vat on invoices that dont have vat numbers, this is not allowed by the revenue.

whippet

I would imagine if you don't know what a VAT invoice is you are not registered for VAT, so it shouldn't matter.

amerden

It is not the original purchase invoice of the van.

Really what the garage is asking you is "are you VAT registered", if so and your trading in a commercial vehicle the garage will want a VAT invoice from you for the vehicle, what you are doing is selling them the van, so they will want to be able to claim back the VAT portion of the van, likewise when they sell you a commercial vehicle, and that vehicle is used for business purposes you (as a company, VAT registered) can claim back the vat on the purchase. If you are not VAT registered then just tell them, it should make no difference to the value of the van.

Baffled

But I want to trade it and buy a car for private use. Can I still do that or will they issue a new VAT invoice? Im confused!

amerden

Baffled wrote:

But I want to trade it and buy a car for private use. Can I still do that or will they issue a new VAT invoice? Im confused!

Just tell the garage that you are NOT registered for VAT and cannot produce a VAT invoice for the Van, the trade in will then be treated as a normal trade in.

Baffled

Whippet, we have a family run business and the van was given to me to trade with my own car, because the van is no longer needed. Yes we are VAT registered, but Im just wondering can I trade a commercial van that has a VAT invoice, without giving them the invoice.

whippet

you will just buy and sell as a normal car.

amerden

Baffled wrote:

Whippet, we have a family run business and the van was given to me to trade with my own car, because the van is no longer needed. Yes we are VAT registered, but Im just wondering can I trade a commercial van that has a VAT invoice, without giving them the invoice.

The only implication I can see here is for your family business and not you, how will your family business explain the disposal of an asset without receiving any payment for it, unless it has been depreciated to zero over its lifetime, but Revenue may still want some proof of disposal.

And YES you can trade a commercial vehicle without having to give the garage a VAT invoice, this has nothing to do with the original VAT invoice when the van was purchased.

Baffled

But as far as the revenue are concerned, will they just think we still have the van?

kluivert

As for the trade in of your car and van for a new car, its a normal trade in, tell them you are not vat registered and it is a private disposal with no commercial background. Then what they will do is sell you the new car discounting the value of the trade from the purchase price.

amerden

Baffled wrote:

But as far as the revenue are concerned, will they just think we still have the van?

You can't pull the wool over the eyes of the Revenue, what happens when they want to see the van??? or wants to know how the comapny disposed of it. !!!!

kluivert

In regards to your question about the Revenue, the disposal of the van will have to be shown on the businesses accounts for the year ended **/**/200*.

The van is being disposed to you from the business for nothing. Therefore proceeds = zero.

When was the van bought and how much will depend on the calculation.
For eg Van cost 5,000.00 bought three years ago and your accountant decided to depreciate the van over four years (25%) per year on a straight line basis. 1st calculate the Net Book Value.

5,000.00 @ 25% = 1,000.00 = Year 1
5,000.00 @ 25% = 1,000.00 = Year 2
5,000.00 @ 25% = 1,000.00 = Year 3
Total deprecaition for 3 yrs = 3,000.00

Cost - Deprecation = Net Book Value => 5,000.00 - 3,000.00 = 2,000.00

Now calculate profit or loss = Proceeds - Net Book Value =Profit/(Loss)

0-2,000.00 = (2,000.00) = a loss should be shown on the accounts and van will be removed from the fixed asset register at the same time.

For the revenue, your accoutant will do the same calculation but instead of a depreciation rate the revenue use a capital allowance rate, same calculation, If like above then you will get a balancing allowance which will be a deduction on the businesses self asssessment return, but the loss on the disposal in the accounts will be added back on the return as it is not consider the "pricincple activity" of the business.

This is very long winded but i hope it helps,your accountant should be able to explain this to you, give them a ring.

Baffled

But why would they ask to see it. They havent yet! Anyways the van was kept at a premises 60 miles away for the last 3 years. And not once have they asked to see it. For what reason would they need to physically see it?

Baffled

So if all comes to all, the accountant should be able to sort it!

amerden

Baffled wrote:

But why would they ask to see it. They havent yet! Anyways the van was kept at a premises 60 miles away for the last 3 years. And not once have they asked to see it. For what reason would they need to physically see it?

The Revenue have a right to see any asset of any Company at any time.

Check with your accountant and make sure that the van has been depreciated to ZERO over its useful life, as per Kiluivert's reply, also check that this has been shown in the company returns over this period.

lomb

kluivert wrote:

In regards to your question about the Revenue, the disposal of the van will have to be shown on the businesses accounts for the year ended **/**/200*.

The van is being disposed to you from the business for nothing. Therefore proceeds = zero.

When was the van bought and how much will depend on the calculation.
For eg Van cost 5,000.00 bought three years ago and your accountant decided to depreciate the van over four years (25%) per year on a straight line basis. 1st calculate the Net Book Value.

5,000.00 @ 25% = 1,000.00 = Year 1
5,000.00 @ 25% = 1,000.00 = Year 2
5,000.00 @ 25% = 1,000.00 = Year 3
Total deprecaition for 3 yrs = 3,000.00

Cost - Deprecation = Net Book Value => 5,000.00 - 3,000.00 = 2,000.00

Now calculate profit or loss = Proceeds - Net Book Value =Profit/(Loss)

0-2,000.00 = (2,000.00) = a loss should be shown on the accounts and van will be removed from the fixed asset register at the same time.

For the revenue, your accoutant will do the same calculation but instead of a depreciation rate the revenue use a capital allowance rate, same calculation, If like above then you will get a balancing allowance which will be a deduction on the businesses self asssessment return, but the loss on the disposal in the accounts will be added back on the return as it is not consider the "pricincple activity" of the business.

This is very long winded but i hope it helps,your accountant should be able to explain this to you, give them a ring.

beats me how u are calculating a 25% capital allowance, its 12.5 % straight line for 8 years here, so unless ur company owned the car for 8 years there will be value in it. vat needs to be accountated for regardless as sale of a commercial van isnt zero rated i dont think. furthermore, even if it was written off to zero, and u sell it for 3 grand , 3 grand would accumulate to the company as profit and tax would have to be paid. u cant just sell a van ur company owns to someone and not account for it. in fact u may have to pay dividend tax and income tax on it as its a payment in a sense if u are taking it.

kluivert

25% is an example of the deprecation, the revenue have there own rates for Capital Allowances based on the year of purchase. But the calculation is basicly the same LOMB.

Please read the question from Baffled, states that it is a family runned business and not a company - Dividend Witholding Tax????


The Transaction is a disposal to Baffled of the van, Proceeds for the disposal is Zero. The van now becomes the property of Baffled.

More details is required in order to decide on the substance of the transaction. In which i would advice Baffled to get in touch with the business' accoutant.

RTFQ....

MercMad

Aside from the above situation there is one question remaining. If the garage values the van at €10,000 + vat will they give Baffled €10,000 or €12,500 ?? (as an example where VAT is 12.5% )

And when they go to sell it on will the garage be able to generate a VAT invoice and will this influence their ability/desire to accept the van from someone who cant supply THEM with a VAT invoice ?

amerden

MercMad wrote:

Aside from the above situation there is one question remaining. If the garage values the van at €10,000 + vat will they give Baffled €10,000 or €12,500 ?? (as an example where VAT is 12.5% )

And when they go to sell it on will the garage be able to generate a VAT invoice and will this influence their ability/desire to accept the van from someone who cant supply THEM with a VAT invoice ?

If the garage values (allows) the van at €10,0000 + VAT and gets a VAT invoice (Commercial Vehicle ONLY), Baffled will get a Trade-in value of €12,100 against the vehicle he/she is purchasing, it makes no difference to the amount they allow if they get an invoice or not, that is what they will have valued it at.

The garage would be able to raise a VAT invoice if they sold the van to a VAT registered person and the vehicle was going to be used solely for the purpose of the business.

Baffled

Ok so, if I trade it with the VAT invoice, can I still buy the car privately. I dont want to purchase it through the company.

Also, the VAT Invoice, is it just a receipt or something. Had a quick look for it last night but couldnt find anything. It defo has one but I just dont know what im looking for.

(Also, no snotty remarks, Im female and new to all this VAT stuff)

amerden

Baffled wrote:

Ok so, if I trade it with the VAT invoice, can I still buy the car privately. I dont want to purchase it through the company.

Also, the VAT Invoice, is it just a receipt or something. Had a quick look for it last night but couldnt find anything. It defo has one but I just dont know what im looking for.

(Also, no snotty remarks, Im female and new to all this VAT stuff)

If you Trade in the van it doesn't matter if you are able to supply a VAT invoice or not, the Garage has valued your vehicle at X Euro's, that's what they have agreed to allow you as a part-exchange on the purchase of their vehicle, end of story,

FORGET ABOUT VAT INVOICES, the VAT invoice the garage requested IS NOT the original VAT invoice for the purchase of the Van, you DO NOT HAVE TO supply them with a VAT invoice, they will treat your part exchange (Van) as if it was a passenger vehicle (Car), just tell the garage that YOU are not registered for VAT and it is a privale transaction.

kluivert

Amerden is spot on FORGET about vat invoices altogether. Just turn up at the garage with the van and your car trade them for a new car and pay them the remaining balance nothing more nothing less.

DubTony

But then the issue is will the dealer reduce the trade in value because he can't claim the VAT ?

amerden

DubTony wrote:

But then the issue is will the dealer reduce the trade in value because he can't claim the VAT ?

No the dealer will not reduce the Trade-In value just because he has not got a VAT invoice, he will still be able to claim back the VAT element of the vehicle that is traded in.