Taxi Driver Online

Quick Vat question, started new business in feb 2007 things are currently going well, havent got near the vat limit but hopefully in the near future will.

Now looking at buying a new vehivle on finance is it worth registering for vat in advance anyway or should we just sit tight till we hit the threshold

If you are working on business contracts it may be worth registering but if you are doing mainly street work it may not be a good idea because VAT is included in your metered rates.

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Grandad,

I would usually say not unless you have to. It depends on the nature of your business. Talk to your accountant if not sure.

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We started mainly on street stuff but we are gathering a few business contracts.

My main isuue is looking long term and shelling out the vat on a new vehicle that we cant get back if un registered.

As far as the accountant goes we are in the proccess of getting a new one, the old one was useless

That is the reason many of us should be registered, but not many of us are.

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IDFIMH

You can claim back the VAT on assets upto 3 years after purchase, providing you still have the asset. So even if you can't claim the VAT back now, you can in the future when you need to be registered.

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Grandad,

My main isuue is looking long term and shelling out the vat on a new vehicle that we cant get back if un registered.

Can you legally claim back the VAT even when you never reach the threshold like when you buy a new cab

No.
You can however offset it against income tax like any other expense.
If you register for VAT you will have to pay a proportion of all income to the VAT man.
Generally speaking, you would end up paying more in VAT than you would be able to claim back.
I wouldn't unless I had to.

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AVOID VAT UNLESS YOU HAVE TO. THE CUSTOMS AND EXCISE ARE LIKE THE FBI AND ARE A LAW UNTO THEMSELVES.

Hi guys, long time no speak.

VAT as I see it is horses for courses assuming you have a choice and are not already over the limit.

I assume this is not the case with our friend who raises the question

Therefore the best way of avoiding paying the VAT is to buy an ex demo as VAT is only charged on new vehicles.

If this is not possible then yes off set the cost of the vehicle and the vat against the tax payable, then each year off set the depreciation. Be careful though as to what car you choose if it is over a certain value, last time I looked it was 15k the percentage reverts to a flat maximum amount

The reasoning for this is they found company owners were buying luxury vehicles and offsetting them on tax, another so called loop hole closed.

If you are an owner driver you should not register for VAT IMHO as you will have to pay vat on the total of the job turnover not just the commission paid to you by the operator. So yes you will end up paying more, lets say you are on a 20/80 split you will have to pay 17.5% on the 100% figure.

Yes of course you can reclaim the VAT on a new vehicle and all the fuel ect. Doubt you will buy a new car every year and even if you did the battle would still leave you out of pocket.

Whereas if you are an opperator, it stands to reason your turnover will quite quickly attract VAT, even if you are only an agent with a curcit fee of £100 per week per driver as soon as you have more than 10 drivers you have reached the threshold.

If this is the case then the vat needs to be charged on top of the curcuit fee and vehicle rental charges, but not to account customers unless you surcharge for the facility then it is only on the surcharge not the total bill. This is the only way to make money in this business as yes you can buy new cars offset the VAT, tax and depreciation at the same time as making an income out of the depreciating asset, if you drive yourself you can also get back the VAT on your fuel

Down side, when you sell the vehicles you have to pay VAT on the monies gained even though you can not charge it to the person you sell it to.

So the motto of the story is, they still get you in the end

Take care

Eric

Oh yes forgot to mention, if you are driving yourself as well make sure you only do the account work so you can charge them the VAT on top else you will also end up out of pocket as cash punters won't pay VAT on top!!!!!

Regards Eric

Eric, I am sure that if you have claimed the VAT back on a vehicle that is part of your business that when you sell that vehicle you DO charge VAT.

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Grandad,

This is correct. If you buy a commercial vehicle (vans etc) from an auction, the sale price is subject to VAT.
VAT isn't applied to private cars, even when entered by a large dealer.

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Grandad wrote:



Cant charge VAT to someone who can not claim it back

Yes you HAVE to pay VAT if you are registered, regardless of if yu claimed it in the first place or not.

Regards Eric

What are you talking about??? Most of our customers can't claim back the VAT. It still has to be charged. If you go to the pub and buy a beer, you can't claim back the VAT but it is still charged. If you are registered for VAT anything that you supply is subject to VAT, if the supply is vatable. A vehicle that is used as part of your business that has had the VAT claimed is subject to VAT on resale. It it wasn't I would be buying new cars and claiming back the VAT and then selling them on again and not charging VAT. It is not the same though if you are a car dealer that buys and sells cars under the margin system.

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Grandad,