Vat registration for an agency

[Sockpuppet]

There is a margain scheme available for horses so you should only be paying VAT on the difference between buying -> selling price. So buy horse for £1000 (no vat paid) and sell for £2000 you'll only pay VAT on the £1000 bit in the middle.

HM Revenue & Customs

Look at section 16 on this page, also speak to you accountant. You should be able to claim back the overpaid VAT you've paid to date.

16. The Margin Scheme in particular trade sectors: dealers in second-hand horses and ponies
top ^
16.1 What do I need to know?
This section deals with the special rules you need to follow if you want to sell second-hand horses and ponies under the Margin Scheme. It doesn’t give you detailed information about how to use the scheme: that information is in sections 2 to 13.

You can only sell horses and ponies which are second-hand under the Margin Scheme.

A horse or pony which has previously been owned by somebody else is second-hand.

A horse or pony which you have bred and are selling for the first time is not second-hand, regardless of how much work or expense you have put in to preparing it for sale.

If VAT is shown separately on the purchase invoice for a horse or pony you have bought, you can’t use the Margin Scheme when you sell the animal on.

Paragraphs 16.2 to 16.6 of this section tell you what records you must keep if you use the special three-part forms supplied by The British Equestrian Trade Association (BETA).

Paragraph 16.7 tells you what records you must keep if you don’t use the special three-part forms.

[desperate]

VAT registration for an agency

Many thanks for the advice.
I think that our main problems are that we cannot claim on the animals coming in as they are from private sellers outside of the UK.
When we sell, most of our clients are private purchasers, who are not registered . If we add 20 per cent to our sale price, we are in effect pricing ourselves out of the market , which is extremely competitive in thiese current climes. Why buy from me, when you could purchase a similar animal from a" private seller" at a lower cost.
Some of our biggest expenses are forage, feed and bedding which are zero rated, so nothing to claim there either.
The money that we pay to our principles after we have sold the animals has pushed us over the vat threshold, could it be possible that because we pay vat only on the commission not the principles money that there has been an error?
Please understand that I am not trying to avoid paying my dues to the government, I just find my position unsustainable at the moment and trying to find a solution. I am not an acaedemic, just a very tired simple country person whose world revolves around animals and with little experience of the situation that I find myself in. I do have accountants who represent me, and am in the process of seeking urgent independant advice.
Again many thanks
Many thanks for the advice.

[JamJarST]

Are you reclaiming the VAT on the horses when they are imported ?

The VAT is charged on top of the sale price of the hores so as an example -

Horse is imported into UK @ a cost of 1000 + VAT = 1200 you will reclaim the 200 VAT

You school the horse , vet it and feed it reclaiming the VAT added to the invoices say 400 of VAT that you reclaim

You sell the horse for 4000 + VAT = 4800 you pay the 800 VAT to HMRC

So you net VAT position is a payment of 200 to HMRC on that horse which will be paid to you by the person buying the horse

Your profit on the horse and the VAT related to that horse are not connected , the VAT is not causing you problems it is not making enough on the horse when you sell it that is the issue.

Perhaps you are not recieving a VAT invoice when you buy the horse ?

My guess is that the OP used to sell the horse for £4000 before he was Vat registered, now he is still selling for £4000 but as an inclusive figure rather that £4000 plus £800 so effectively losing £666. I also suspect he isn't claiming any input.

Like all have said before ..... Seek professional advice

[Clare@InTouch]

At the risk of just posting to agree with the above, I agree with the above Get yourself an appointment with a local firm who don't charge for initial appointments and talk to them. Make sure they know about the margin scheme and overseas VAT issues before you engage them, so shop around if necessary.

[geoff from contracta IOM]

You need an accountant, urgently. VAT is supposed to be broadly revenue neutral to registered companies, but there are complexities with non-UK clients and the like that you may not have picked up on. This is not somehting you should rely on a bunch of random amateurs to answer in any great detail - go find an expert, possibly including one of the several that follow this forum.

I will try and help untill one comes along

[geoff from contracta IOM]

VAT

Are you reclaiming the VAT on the horses when they are imported ?

The VAT is charged on top of the sale price of the hores so as an example -

Horse is imported into UK @ a cost of 1000 + VAT = 1200 you will reclaim the 200 VAT

You school the horse , vet it and feed it reclaiming the VAT added to the invoices say 400 of VAT that you reclaim

You sell the horse for 4000 + VAT = 4800 you pay the 800 VAT to HMRC

So you net VAT position is a payment of 200 to HMRC on that horse which will be paid to you by the person buying the horse

Your profit on the horse and the VAT related to that horse are not connected , the VAT is not causing you problems it is not making enough on the horse when you sell it that is the issue.

Perhaps you are not receiving a VAT invoice when you buy the horse ?

[malvolio]

HI , Can anyone please give me some advice.
I am an agent, working on a sale or return basis dealing with horses imported from another country, which I then school and produce for sale here in the UK.
I became Vat registered last year when we exceeded the VAT threshold. So now we are registered and paying it on time every quarter but it has crippled the business so much that we are now making a serious loss and about to go under.
My questions are, should the money for the principles that we sell for have been included in the gross profit or should it just have been our commission that put us into VAT registration ?
Also, we are on a margin scheme, on which we pay 20% of our commission to the VAT man, but the problem with this is that is it not profit, when taken into account feeding, vets etc and out possible time to get the animal ready for sale here may take up to three months one of the last horses the last horse that I sold I paid £452 in VAT to the government but made a loss of £700 for the business . I do understand that you only pay VAT on Profit, but there are so many grey areas that no one seems to understand when it comes to horses.
I do apologise if this is hard to understand and appreciate any advice that may be offered.
Many Thanks

You need an accountant, urgently. VAT is supposed to be broadly revenue neutral to registered companies, but there are complexities with non-UK clients and the like that you may not have picked up on. This is not somehting you should rely on a bunch of random amateurs to answer in any great detail - go find an expert, possibly including one of the several that follow this forum.

[northernladuk]

I will get slated by the board but surely if your company is about to go under and you are struggling with the concept (VAT on profit? I don't think so) would you not be better going getting some professional advice very quickly? We do have some accountants posting on here but free advice on a public board is not what you need right now IMO.

[desperate]

HI , Can anyone please give me some advice.
I am an agent, working on a sale or return basis dealing with horses imported from another country, which I then school and produce for sale here in the UK.
I became Vat registered last year when we exceeded the VAT threshold. So now we are registered and paying it on time every quarter but it has crippled the business so much that we are now making a serious loss and about to go under.
My questions are, should the money for the principles that we sell for have been included in the gross profit or should it just have been our commission that put us into VAT registration ?
Also, we are on a margin scheme, on which we pay 20% of our commission to the VAT man, but the problem with this is that is it not profit, when taken into account feeding, vets etc and out possible time to get the animal ready for sale here may take up to three months one of the last horses the last horse that I sold I paid £452 in VAT to the government but made a loss of £700 for the business . I do understand that you only pay VAT on Profit, but there are so many grey areas that no one seems to understand when it comes to horses.
I do apologise if this is hard to understand and appreciate any advice that may be offered.
Many Thanks