VAT on Auction

[Tommy Ng]

Hi

Is VAT applicable in ebay auctions?? Have not seen any seller mentions about VAT. Are all prices include VAT?

 

[AndyG]

Hi.
If a seller is registered on the site as a business seller, and is VAT registered, then yes, Vat is charged.
Most include it in the sale price and will tell you so, but beware, there are some that will add Vat to the final selling price, but again, they should mention that this is the case on the listing.

Hope this helps

 

[Tommy Ng]

Cheers

 

[Pete Thomas]

Most include it in the sale price and will tell you so, but beware, there are some that will add Vat to the final selling price, but again, they should mention that this is the case on the listing.

Correct.
I am VAT registered and have to charge VAT on auctions. I don't add the VAT afterwards, I include it.

This means if I sell something for £100, the buyer pays £100 including VAT and I then have to pay £15 or whatever of that to HM and I end up with £85.

Sometimes I mention on the auction that I add VAT afterwards for UK and EU, but people don't like that.

If I include the VAT It makes no difference to the buyer unless they are VAT registered, in which case I give them a VAT invoice and they can claim it back.

 

[SteveK]

.....also, to state the obvious, VAT is not chargeable on second hand stuff.

 

[Pete Thomas]

.....also, to state the obvious, VAT is not chargeable on second hand stuff.

Not quite true, VAT is chargeable on second hand stuff.

 

[SteveK]

Thanks for putting me straight. I got this impression because when they reduced VAT to 15% I spoke with a guy in a shop, when discussing a second had sax and he said the price would be unchanged. Hum, you live and learn.

Steve

 

[fishpond]

Even though the vat rate reduced from 17.5% to 15%, it quite often wasn't worth the hassle of going round a small retail outlet reducing everything by 2.5%.
So a lot of small retail outlets didn't bother.
Which may go someway to explain why the sax you were enquiring about, stayed the same price.

 

[SteveK]

Understood - but this was a bout two days before and I said I'd come back in two days to get the lower price. He said don't bother because there is no VAT on this sax anyway.
It's irrelevant because I didn't buy it anyway.
Steve

 

[Tommy Ng]

Understood - but this was a bout two days before and I said I'd come back in two days to get the lower price. He said don't bother because there is no VAT on this sax anyway.
It's irrelevant because I didn't buy it anyway.
Steve

Please let me know which shop doesn't charge VAT

 

[fluterer]

If he was selling it on commission then there wouldn't be any VAT on the sale.

 

[Pete Thomas]

Ok, it's not that simple.

All shops who are VAT registered charge VAT. Some smaller businesses aren't VAT registered so don't need to charge it.

When you are VAT registered you need to charge the VAT (which you then pay to HM).

With secondhand goods, if the VAT registered business can prove that they bought it from someone who is not VAT registered, and so did not pay VAT, then they do only need to charge VAT on any profit they make from selling that item.

e.g:

VAT registered business buys secondhand saxophone off non VAT registered individual for £1000. They sell if for £1200, they must charge VAT only on the £200 profit.

If they sell it for £1000 or less, then there is no VAT.

Sometimes if the customer pays cash and doesn't get a receipt, the money goes straight into the shopkeepers pocket. They don't enter it in their books and it doesn't get mentioned to the good folks at HM Revenue.

 

[Altolady]

Maybe the shop's turnover doesn't reach the Vat threshold thereby not charging vat on the sax in the first place? Really, if they are Vat registered, the Vat reduction should have been passed on to the customer, but they could get round this by increasing the cost of the sax before Vat addition. Lots of small businesses probably benefitted from this and I don't blame them.

 

[kevgermany]

The downside of this is that any tax increases are passed straight on to the customer, with the seller washing his hands and blaming the govt.... A tax reduction shouldn't be an excuse to increase pre-tax prices.

 

[AndyG]

Ok, it's not that simple.

With secondhand goods, if the VAT registered business can prove that they bought it from someone who is not VAT registered, and so did not pay VAT, then they do only need to charge VAT on any profit they make from selling that
.

Correct, Vat is not so simple.

When I was purchasing a commercial vehicle (van) last year, I questioned why some were listed +VAT and others not and was given the explanation that if he purchased the vehicle from a VAT registered seller ( in many cases lease companies), he paid VAT and therefore has to charge it.
However if he purchased without paying VAT ie. from someone not registered, he doesnt have to charge VAT.
Fortunately as Im VAT registered I got it all back

 

[Pete Thomas]

However if he purchased without paying VAT ie. from someone not registered, he doesnt have to charge VAT.

Yes, exactly. Except he should be paying VAT on his profit, but as many sellers don't want the buyer to know what the profit is, they just include it in the price and say nothing.