VAT on van sale now it’s converted

[Rustic12]

Hi all. Wonder if anyone out there could answe this. I bought a new panel van approx 1 1/2 ago on which being vat registered I claimed the vat back. I then had it converted to a high spec camper on which I didn’t claim.All in it has cost about £60 k. I’m now considering selling the van. What vat would I be liable to pay . ?

 

[Andywasere]

You will be liable for VAT at the standard rate on whatever you sell it for. Is it too late to backdate a claim on all the parts used?

 

[Dogs Dung]

24 months to claim I believe (if not previously included on any of your VAT returns)

 

[Andywasere]

If you are selling the end van for more than you paid you will also be liable for corporation tax on the profit.

 

[Dellmassive]

Vat doesn't have to be taxing..... Lol

 

[jimc91]

In hindsight you would have been better selling the van to yourself before the conversion at a loss, it’s currently a company asset.

 

[dubber36]

In hindsight you would have been better selling the van to yourself before the conversion at a loss, it’s currently a company asset.

If he's not claimed the VAT or any tax relief on the conversion parts and work, there's no reason why he still cant do that now.

 

[jimc91]

If he's not claimed the VAT or any tax relief on the conversion parts and work, there's no reason why he still cant do that now.

fair point, the vatman wouldn’t know or be that interested about the conversion if nothing is claimed and the private use element of any fuel bills etc was accounted for. if it was me I’d sell the van to myself or my wife as if it was still a panel van with the appropriate depreciation, pay the vat owing now. Even if visited there’s nothing in the company records to ever show when it was converted and therefore no obvious loss to the revenue

 

[Rustic12]

that’s a good idea jim. Anyone see any problems with this ? I paid 35k for the van including vat, what do you think I could get away with selling it to my wife for ?

 

[Andywasere]

that’s a good idea jim. Anyone see any problems with this ? I paid 35k for the van including vat, what do you think I could get away with selling it to my wife for ?

When we've sold company assets to staff etc we have always used sold for the current book figure from the accounts to keep the tax side of things simple.
Do you depreciate all plant & vehicles by 20% per year?
If so book value is probably £35k less vat= £29.1k x 0.8 x 0.8 = £18.7k +VAT

 

[Dogs Dung]

If you are selling the end van for more than you paid you will also be liable for corporation tax on the profi

that’s a good idea jim. Anyone see any problems with this ? I paid 35k for the van including vat, what do you think I could get away with selling it to my wife for ?

25% depreciation per annum

 

[Rustic12]

Thanks for all the reply’s. Vat not my strong point so apologies . If I sold it to my wife with 25% annum depreciation , what would the calcs be ?

 

[dubber36]

75% of £35,000 in year one =£ 26,250
75% of £26,250 in year two = £19,687.50

 

[Andywasere]

Not quite as you don't depreciate the VAT.

its £35k less vat= £29.1k x 0.75x 0.75 = £16,368.75 add the VAT back on = £19,642.50

If you can wait until you get into your companies next financial year you could get another years depreciation & it would be £12,276.56 + VAT = £14,731.88

 

[czmate1999]

Some good advice here

Admins, it might be worth adding some relevant tags to this thread for an easy find in the future.

 

[dubber36]

I'd assumed it was £35k plus VAT to begin with, therefore the sale price after year 2 would be £19,687.50 + VAT

 

[Rustic12]

No it was 35k including vat

 

[Dogs Dung]

Vehicles & plant tend to be either 20% or 25% straight line depreciation, ie same % each year on the new depreciated value,as above mentioned, depreciation on pre vat price

 

[Rustic12]

Great advice everyone. Thanks a lot

 

[Salty Spuds]

Or keep it for 5 years, write it off & buy it out of the company for scrap value