Selling Company Van

[Wanderer]

I as a contractor with my own limited want to sell the compay van to myself and then on privately.
The question is - what is the best way to go about this and do I have to charge VAT to myself as ive been told that I do - but I can't get my head round why?

OK, imagine your business buys an asset for (say) £12,000 and claims back £2,000 in VAT so the net cost to the business was £10,000. Imagine if they could sell it on the very next day for (say) £11,000 and still keep the VAT they reclaimed. Instant £1,000 profit. That isn't going to work, is it - everyone would do it and rob the VAT man blind. So what happens is that you claim back the VAT when you buy it and then pay over the VAT on the selling price.

What's happened in your case is that over time the imaginary £12k asset depreciates and then you sell it for (say) £3,000 (inc VAT) and pay VAT of £600 to the tax man. So, by being VAT registered, you have avoided paying £1400 in VAT. Also note that if you sell it to another business that is VAT registered then they can claim the VAT back on the purchase. If you sell it to someone privately who then sells it on to a VAT registered business then they can't claim the VAT back.

Also - would HMRC want evidence as to the value of the vehicle and could I use a "webuyanyvan" quote as such ?

I can't see any problem with that. To be safe, I'd get two written quotes for the vehicle and file them away with your paperwork to prove that your company got a fair market value for the vehicle. Of course, it would be dishonest to misrepresent the sale by telling people giving the quote that the van is in poor condition to try and devalue it.

I presume that you want to buy the van yourself, tart it up a bit and then sell it on for a profit? Do the sums though and make sure that it's really worth your while. You may be better off just tidying it up and selling direct from your company to someone who could potentially claim back the VAT.

[xoggoth]

As above on VAT. Busines selling is VAT registered and purchaser is irrelevant. When I sold mine to me I kept a bunch of ads for that model/reg as proof of realistic price.

[TykeMerc]

The reason you have to charge VAT on the sale is fairly simple, it's not a VAT exempt sale, your Ltd is VAT registered therefore it's obliged to charge VAT on the sale.

Should HMRC perform an investigation they will want to see reasonable evidence that the sale was done for a commercial price or they could consider you were pulling a fast one since it's your company and you would face potential fines for a benefit you've not paid tax on.

[Mat7777]

Hi

I as a contractor with my own limited want to sell the compay van to myself and then on privately.
The question is - what is the best way to go about this and do I have to charge VAT to myself as ive been told that I do - but I can't get my head round why?
The Vehicle is nearly three years old and bought from new by my company.
Also - would HMRC want evidence as to the value of the vehicle and could I use a "webuyanyvan" quote as such ?

Many thanks in advance to anyone who can answer as I cant find anything about it on HMRC website or search engines.