Selling laptop bought under flat rate scheme as it can't be returned

[Contreras]

I suspect what he meant was that if you reclaimed the VAT, you must account for the VAT at the standard rate on your VAT return instead of applying your flat rate percentage to the gross.

To be fair, the HMRC guidance on this is worded just as poorly:

1) Two wrongs don't make a right.

2) Chartered Accountants and Tax Advisors touting on a contractor's forum better had get it right or expect to be corrected.

[TheCyclingProgrammer]

No ifs about it. The OP must charge VAT at the standard rate must issue a VAT invoice, regardless of whether the input VAT was reclaimed.

I suspect what he meant was that if you reclaimed the VAT, you must account for the VAT at the standard rate on your VAT return instead of applying your flat rate percentage to the gross.

To be fair, the HMRC guidance on this is worded just as poorly:

Selling a capital asset
If you meet all the conditions and claim back the VAT on a capital asset, then when you have finished with the asset and sell it, you must charge VAT at the full standard rate - not at your flat rate percentage.

[Contreras]

Maccy, you may be able to claim back the VAT on the laptop if the VAT-inclusive price of the purchase was £2,000 or more and this was all shown on a single invoice. If you fall into this category, and claim back the VAT on the laptop, then when you come to sell the asset , you must charge VAT at the full standard rate - not at your flat rate percentage. You may need to then issue a VAT invoice to the purchaser (albeit on ebay) so that the potential buyer (should they be able to reclaim the VAT) can do so.

Hope this is of help.

theAccountant

No ifs about it. The OP must charge VAT at the standard rate must issue a VAT invoice, regardless of whether the input VAT was reclaimed.

[theAccountant]

I bought a laptop for my ltd which is unsuitable, but can't be returned as it was a business purchase.

I would now like to sell it via ebay, as it will just collect dust otherwise. It was bought under the flat rate scheme.

Is there anything I need to bear in mind? Do I need to charge the buyer VAT on it?

Maccy, you may be able to claim back the VAT on the laptop if the VAT-inclusive price of the purchase was £2,000 or more and this was all shown on a single invoice. If you fall into this category, and claim back the VAT on the laptop, then when you come to sell the asset , you must charge VAT at the full standard rate - not at your flat rate percentage. You may need to then issue a VAT invoice to the purchaser (albeit on ebay) so that the potential buyer (should they be able to reclaim the VAT) can do so.

Hope this is of help.

theAccountant

[philip@wellwoodhoyle]

Why can't it be returned?

Businesses have no legal right to return goods they simply don't want. Consumers have the right under the distance selling act, but it doesn't apply to businesses. Of course, many sellers will allow businesses to return unwanted goods, but it's at their discretion and according to their T&Cs. I got caught out by this once and am now very careful to check the sellers' T&Cs to check whether refunds are offered before I make a purchase.

[CloudWalker]

Laptops can be very heavy to lug about so One laptop at Home (Business site) one laptop at Work (client Site) job done!

[Batcher]

I don't see why. Two laptop purchases is hardly out of the ordinary and I don't see why HMRC would waste time examining such trivial things. So long as they were both wholly and exclusively for business purposes there is no issue.

Other than that, what Contreras said. Also confused as to why them being a purchase means they can't be returned though.

Due to needing to issue a VAT invoice, it might be easier for OP to sell the laptop themselves (at the full second hand value, to avoid any potential BIK issues) and raise a VAT invoice to themselves, then flog it on eBay as a personal transaction.

During my IR35 investigation, HMRC actually asked if the one laptop I had purchased through the business was required for the running of my business. It was easily batted away but I often wonder if they ask the same question about the thousands of laptop/PCs being used at the clientcos I contract at.

As to the OP, I would agree selling it to yourself at the proper price is the best way if you can't return it.

[TheCyclingProgrammer]

Two laptop purchases in a short period of time is going to come under some pretty close scrutiny if you are investigated surely?

I don't see why. Two laptop purchases is hardly out of the ordinary and I don't see why HMRC would waste time examining such trivial things. So long as they were both wholly and exclusively for business purposes there is no issue.

Other than that, what Contreras said. Also confused as to why them being a purchase means they can't be returned though.

Due to needing to issue a VAT invoice, it might be easier for OP to sell the laptop themselves (at the full second hand value, to avoid any potential BIK issues) and raise a VAT invoice to themselves, then flog it on eBay as a personal transaction.

[Unix]

Two laptop purchases in a short period of time is going to come under some pretty close scrutiny if you are investigated surely?

Why? As long as the tech is related to you business you can buy it, it's a good way of reducing your corp tax as well. I've bough laptops/macbook/ipads monitors desktops etc and used them for my business.

[northernladuk]

Two laptop purchases in a short period of time is going to come under some pretty close scrutiny if you are investigated surely?

[TheFaQQer]

I bought a laptop for my ltd which is unsuitable, but can't be returned as it was a business purchase.

Why can't it be returned?

[Contreras]

I bought a laptop for my ltd which is unsuitable, but can't be returned as it was a business purchase.

I would now like to sell it via ebay, as it will just collect dust otherwise. It was bought under the flat rate scheme.

Is there anything I need to bear in mind? Do I need to charge the buyer VAT on it?

If you are VAT registered then you must charge VAT on the sale price.

The decision is whether you pay that VAT to HMRC or only the FRS percentage:

- If you treated the purchase as a capital asset and reclaimed the VAT then HMRC are due the full VAT you charged.

- Otherwise, if you didn't reclaim the VAT on the puchase, then HMRC are due the FRS percentage on the sale price.

Also there would be an accounting exercise for CT and company assets, but likely to be cost neutral I think.

[kal]

I bought a laptop for my ltd which is unsuitable, but can't be returned as it was a business purchase.

I would now like to sell it via ebay, as it will just collect dust otherwise. It was bought under the flat rate scheme.

Is there anything I need to bear in mind? Do I need to charge the buyer VAT on it?

So you spent over 2k on a business laptop that wasn't suitable, what was wrong with it!

[maccy]

I bought a laptop for my ltd which is unsuitable, but can't be returned as it was a business purchase.

I would now like to sell it via ebay, as it will just collect dust otherwise. It was bought under the flat rate scheme.

Is there anything I need to bear in mind? Do I need to charge the buyer VAT on it?