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• # 74139
• Wed 07 Sep 2011 08:43 PM

I have a client who is VAT registered that recently sold his twin cab to a private person for cash.  He intends to use the cash to put towards his new 2nd hand twin cab.  The twin cab that he is purchasing has no VAT on it.  I'm unsure whether I will have to pay VAT on the twin cab he sold for cash.  When you buy them brand new they are subject to VAT. 

I think I should pay 20% on the value of cash he received.  It was used on his farm as a commercial vehicle as he has a private car seperately.  Advice please.

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• # 74140
• Wed 07 Sep 2011 09:10 PM

If your client is VAT registered, then he should have charged VAT when he sold this.

Kris 

• Kris McCulloch
  www.ayrshireaccountancy.co.uk
  
  Winner - BKN Most Innovative Accountancy Firm 2012
  
  Latest Blog Post: Bookkeepers Award 2015

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• # 74148
• Thu 08 Sep 2011 05:39 AM

You should definitely provide for the Output VAT on the cash sale. However it will not be 20% of the cash received - the VAT fraction to calculate this is 1/6 of the sale proceeds. So if he sold it for £3000 then the VAT element will be £500.
Have you also considered that this could be classed as money laundering???
Good luck

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• # 74151
• Thu 08 Sep 2011 07:48 AM

Thank you that's what I told him.  I shall pay the correct portion to the VAT man.  I think he was confused as 'new' one doesn't have VAT on it.  He only sold it privately as they wouldn't take it as a trade in.  It isn't even worth anything in his books anymore.

I am not worried about money laundering as this is the first cash transaction there has been and it isn't even much.  He was lucky to get more than scrap value for it.  He had done out a receipt for the new purchaser it just didn't have a portion of VAT mentioned on it, but his VAT reg no is on his stationery.  It was the right sum of money for the age, condition etc I would've said.  He was thinking it was like a car I think. 

He is happy enough to pay the VAT he was just unsure if he had to.  I said I would ask the question here just to clarify that I was indeed correct. 

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