VAT question

inferno

inferno

inferno

Associate
Joined
23 May 2004
Posts
2,184
Hi guys,

I bought a phone for a £599 and traded in my old one for £220, so I paid £379 cash, the receipt says £136 of VAT but when I asked for the VAT receipt they only gave me £63 based on the £379, is this correct?

Cheers
 
Part-exchanges
If you supply goods or services and receive other goods or services in exchange (or part-exchange) you must account for VAT on the amount the customer would have paid you if they had given you money instead.
Click to expand...

Assuming this is a business transaction, though, you yourself would need to pay over VAT on the handset you 'sold', and then claim back the full VAT on the handset you bought.

Info here:
https://www.gov.uk/guidance/vat-part-exchanges-barters-and-set-offs

E:
On top of that, I think there might be some special VAT rules about mobile phones, rooted in fraud prevention.

You'd probably need an expert to unpick it all, to be honest.
 
Last edited:
cheesyboy said:
Assuming this is a business transaction, though, you yourself would need to pay over VAT on the handset you 'sold', and then claim back the full VAT on the handset you bought.

Info here:
https://www.gov.uk/guidance/vat-part-exchanges-barters-and-set-offs

E:
On top of that, I think there might be some special VAT rules about mobile phones, rooted in fraud prevention.

You'd probably need an expert to unpick it all, to be honest.
Click to expand...

The shop are treating him as a non-VAT registered individual though aren't they? Hence they have just taken off the gross £220 to give a VAT rcpt of £316 + 63 VAT...else they would need a VAT invoice from the OP

The shop will still account for the full VAT on the sale of the phone at £599

If the OP is looking to put this through his books, then yes, he would have to account for VAT on his trade in of £220


Just seen your last edit : Hmm....if there is special rules on phone trade ins, I'm not aware of it.....as I've never come across it
 
Last edited:
inferno said:
Hi guys,

I bought a phone for a £599 and traded in my old one for £220, so I paid £379 cash, the receipt says £136 of VAT but when I asked for the VAT receipt they only gave me £63 based on the £379, is this correct?

Cheers
Click to expand...

If you paid £379 for a £599 phone how did they only give you £63?
 
Amleto said:
Are you getting at £63 isn't 20% of £379. In which case that is correct, but you fail on another level. Are percentages really so difficult to grasp!?
Click to expand...

No. I think he is saying the shop only gave him £63 for his phone.

Edit: If he is saying the VAT receipt says £63 then I'm not sure that is correct. The seller has to pay the full VAT but the trade in complicates things. OP, are you VAT registered?
 
Last edited:
Intuitively this makes sense. Hypothetically if you traded in a phone worth £599 in exchange for the shop's phone worth £599, if the shop had to charge VAT on the on the £599 (gross), it would have to pay over c.£100 to HMRC and wouldn't be able to reclaim any amounts on the phone it received from you because you are not charging VAT, thus it would lose £100 on a nil-profit transaction. Therefore it makes sense that the shop is only charging VAT on the cash paid.

I suspect there is something in the second hands goods scheme which allows them to do this, but I am too lazy to look this up for you :p
 
One-off exchanges
You might exchange 1 item for another, or exchange goods for other goods at a reduced price, on a one-off basis. For example, a sports shop might sell a £200 surfboard for £100 plus the customer’s old board. You should treat this sort of transaction as a part-exchange.

Part-exchanges
If you supply goods or services and receive other goods or services in exchange (or part-exchange) you must account for VAT on the amount the customer would have paid you if they had given you money instead.
Click to expand...

https://www.gov.uk/guidance/vat-part-exchanges-barters-and-set-offs
 
You must log in or register to reply here.
Back
Top Bottom