The views expressed in this post are my own personal (HRA protected) views, and are not representative of any organisation I have any involvement with.
If the seller is VAT registered then VAT will be added when you buy a used car at the current rate.
If the seller isn't VAT registered it wont. So buying from a garage you'll probably pay VAT, buying it from the guy down the road, you probably wont.
I assume that you are referring to a trader who is vat registered. If so, then the vat is worked out at 3/23 of the profit. The trader doesn't physically add vat to the selling price, he sells at what ever price he can get and then calculates the vat on the profit, as above.
If your querry relates to a dealers who buys and sell used Vehicles. Then the Company should keep a USED VEHICLE STOCK BOOK. From the Stock Book take the Sale Price deduct the Cost price then multiply the difference by 3/23 for 15 % . Make sure the Registration Numbers Match up of the Vehicles.
If the bookeeping is relating to a Dealership then treat the Bookkeeping postings as normal trade ie Post the Vehilce Bought to PURCHASES £ 869.57 VAT 130.43 GROSS £ 1000 Post the Vehicle Sale to SALES £ 1304.35 VAT 195.65 GROSS £ 1500
USE THE SALES AND PURCHASES REGISTER TO DO THE POSTINGS.
The views expressed in this post are my own personal (HRA protected) views, and are not representative of any organisation I have any involvement with.
Take the Output tax of £ 195.65 less £ 130.43 = £ 65.22 Leaving Vat owing to HMRC on the above transaction. I thought you were intending to input your data onto computer. It is the net figure which gives you profit therefore your profit on this sale would have been £ 500.00 less vat 65.22 Giving you a net figure of £ 434.78 Profit on this sale.
