Van plus VAT and van with no VAT?

[alan333]

To explain this I'll use an example of how vat works.

Say a vat registered company does a job and charges you £1000+vat (at 20%) = £1200 total. The vat amount is obviously £200.

But to do the job he needs to buy £400 of materials +vat = £480 total. The vat is obviously £80.

Then he pays the vat man the difference between the £200 of vat he charged you less the £80 of vat he paid out for the materials. So the vat man gets the £120.

And the company actually ends up with the quoted £1000.

So, taking it to the next level, lets say the company charges £10,000 of vat over it's vat quarter, but only pays out £6,000 in vat on purchases over the same quarter. The he would be due to pay the vat man the other £4,000. But say he then buys a van at £20,000 +vat, the vat would be £4,000 so he now doesn't pay the vat man anything cos he spent it on vat on a purchase.

So how much did the van cost him? £10,000. This is the real van's value.

The van remains vatted when the company sell it, so if they sell it for £5k +vat then the vat man gets the £2k of vat etc.

Most new vans are bought be large companies which are vat registered. But some aren't.

Lets take a small non vat registered trader, he buys the same van for £20k +vat = £24k. Later he sells it but he can't charge vat cos he's not registered. However there are other non vat people around looking for vans, and the price ends up somewhere between the two values.

So if you're looking for a van and you're not vat registered...look for one which isn't plus vat cos it'll be cheaper for you than it's plus vat equivalent.

If you're vat registered the base price ex vat is cheaper.

 

[dreadnoughtheating]

Because that way the van looks 20% cheaper...
If you did an internet search for a van for £XXXX the firms that had their vans labled including the VAT would risk not showin in the searches..

I suggest that you check your maths….

as an example, a van at 12K inc VAT, but advertised at 10k plusVAT, is only 5/6ths (or, even 10/12ths) of the total price, so in fact it 'appears to be' just 16.77% cheaper (NOT 20%)

Bored already? I am and I'm VAT registered.

DH

 

[jockscott]

I suggest that you check your maths….

as an example, a van at 12K inc VAT, but advertised at 10k plusVAT, is only 5/6ths (or, even 10/12ths) of the total price, so in fact it 'appears to be' just 16.77% cheaper (NOT 20%)

Bored already? I am and I'm VAT registered.

DH

Sorry dread,, I'm no Carol Vorderman, but if VAT is rated at 20%, then a van at £12k, (inc VAT) will cost the same in cash as a van at £10k (+VAT)

 

[Dextraneous]

Sorry dread,, I'm no Carol Vorderman, but if VAT is rated at 20%, then a van at £12k, (inc VAT) will cost the same in cash as a van at £10k (+VAT)

Now, I know that's wrong but wine prevents me from working out where I'll get my set 1 kids onto it tomorrow

 

[maltaron]

Sorry, Dex, it is correct. 10k + 20% = 12k. the other way round 12k - 16.7% = 10k (approx. the actual accurate percentage would be more than one decimal point) Before I retired I used to do a lot of cash jobs and offered the customer that I would pay the VAT if they paid cash immediately on completion of the job, so I would invoice at say £100, then minus 16.7**%, add 20% and the result would be £100 that the customer paid of which I paid 16.7**% to the VAT man. It is legal because VAT is charged on the lowest amount (i.e discounted amount) that the customer can pay, regardless of whether he takes the discount.
That should confuse you more!!

 

[masona]

So if you're looking for a van and you're not vat registered...look for one which isn't plus vat cos it'll be cheaper for you than it's plus vat equivalent.

Most of them are plus VAT