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• # 75575
• Mon 24 Oct 2011 12:22 PM

Hello there,

Wondering if anyone can help me please?

The lady in the shop next door is leaving the premises. We have offered to buy some of her stock off of her at cost.

She is not VAT registered but is saying we have to pay her Cost + VAT. We said as she isn't registered she can't charge us VAT. She says that she originally had to pay VAT on the goods of which she will not get back, therefor we have to cover that. She is adament. 

Is this correct?? I'm confused as I always thought they can't charge VAT, yet she will be losing money by supplying the goods to us just at the cost she paid.

Please help, would be much appreciated,

Thanks

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• # 75576
• Mon 24 Oct 2011 12:29 PM

Hi Smiley

You are correct if she is not registered she cannot charge VAT. Her cost price for the goods would have been the VAT inclusive price or the gross invoice value as she would have not been able to claim the VAT.

She can charge whatever price she likes so long as she does not charge VAt on her invoice.

I am not sure why she would have split out he net and VAT if she was not VAT regisistered perhaps she can show you some of her Purchase invoices to allow you to determine the cost price it could be she has bought several items and is taking the cost price as the unit price as the vat is added to the invoice subtotal in which case she would be correct to say her cost price would be the unit price + VAT.

I hope this clarifies things

Kind regards
Stuart

• Forum Moderator, South East & Greater London Regional Chairman
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• # 75586
• Mon 24 Oct 2011 01:26 PM

That answers my question. Thanks very much for your help Stuart,


Kind Regards

Rachel

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