Jackal Posted November 13, 2007 Share Posted November 13, 2007 I don't know whether anyone else has experienced this but we recently imported a new van from Germany and paid the German VAT at a rate of 19% on 44550 EUR. The dealer mentioned in one of his emails and put on the final contract that this amounted to 7009.25 EUR. When we did the sums we found that 19% of that figure is actually 8464.50 EUR Given that I have paid 19% German VAT and only 17.5% UK VAT we were expecting to receive back more than we actually paid out, save the vagaries of the exchange rates at the times of the transactions. Does anyone know if VAT in Germany is computed differently to the UK? The figure he gave us seems to represent only 15.7%. Is he mistaken, on the fiddle or is there a reasonable explanation. The shortfall represents a loss of over £550! Link to comment Share on other sites More sharing options...
Mel B Posted November 13, 2007 Share Posted November 13, 2007 Are you sure that the total cost of the van was vatable? It might be that some of it was zero rated such as registration costs etc. Link to comment Share on other sites More sharing options...
KD Posted November 13, 2007 Share Posted November 13, 2007 how did you do your calcalations you would need to devide your total price by 6.263 to find out how much vat was in it at 19% Link to comment Share on other sites More sharing options...
Guest Tracker Posted November 13, 2007 Share Posted November 13, 2007 How can it be a loss if you did not pay it in the first place? Link to comment Share on other sites More sharing options...
Jackal Posted November 13, 2007 Author Share Posted November 13, 2007 The 44550 euros included VAT at 19% which I paid in full. The contract had the figure of 7009.25 euros as the VAT payable. Surely 19% of the total 44550 is 8464.50 I have a demand from HMRC for 17.5% of 44550, which I have to pay by December 1st. I then am due to have the German VAT that I have paid, in the total of 44550, returned to me. Link to comment Share on other sites More sharing options...
KD Posted November 13, 2007 Share Posted November 13, 2007 Jackal - 2007-11-13 9:07 PM The 44550 euros included VAT at 19% which I paid in full. The contract had the figure of 7009.25 euros as the VAT payable. Surely 19% of the total 44550 is 8464.50 I have a demand from HMRC for 17.5% of 44550, which I have to pay by December 1st. I then am due to have the German VAT that I have paid, in the total of 44550, returned to me. no 19% of 44550 is £7114 you are adding 19% to £44550 your price would have been £37436 plus 19% vat or there abouts Link to comment Share on other sites More sharing options...
KD Posted November 13, 2007 Share Posted November 13, 2007 im self employed and do my own vat returns to find out how much vat is in a price in uk at 17.5% you devide it by 6.714 calculated by 117.5/17.5 to get 19% you do 119/19 =6.263 Link to comment Share on other sites More sharing options...
Jackal Posted November 13, 2007 Author Share Posted November 13, 2007 K+D, I'm not sure I follow. 44550 multiplied by 19 divided by 100 is 8464.50, surely? Link to comment Share on other sites More sharing options...
Jackal Posted November 13, 2007 Author Share Posted November 13, 2007 Mel B, The total price of the van was 43,900. The extra 650 euros was the export plates and a bike rack, which I also paid VAT on. Now even if the latter two were zero rated the figure of 7009.25 just doesn't add up. Link to comment Share on other sites More sharing options...
KD Posted November 13, 2007 Share Posted November 13, 2007 Jackal - 2007-11-13 9:17 PM K+D, I'm not sure I follow. 44550 multiplied by 19 divided by 100 is 8464.50, surely? no you need to divide 119 by 19 =6.263 divide 44550 by 6.263= 7113 which is the vat you have paid Link to comment Share on other sites More sharing options...
Jackal Posted November 13, 2007 Author Share Posted November 13, 2007 K+D, Why divide 119 by 19? HMRC haven't. They've done 17.5% of the total amount (44550) which is 7795.12! Link to comment Share on other sites More sharing options...
KD Posted November 13, 2007 Share Posted November 13, 2007 Jackal - 2007-11-13 9:39 PM K+D, Why divide 119 by 19? HMRC haven't. They've done 17.5% of the total amount (44550) which is 7795.12! again thats putting vat on 44550 the vat in 44550 divided by 6.714 = 6635.38 think about it £100 plus vat is £117.50 the vat in £117.50 is £17.50 £117.50 divided by 6.714 = 17.5 that is how you calculate vat at 17.5% Link to comment Share on other sites More sharing options...
Jackal Posted November 13, 2007 Author Share Posted November 13, 2007 So HMRC are wrong then? Link to comment Share on other sites More sharing options...
Jackal Posted November 13, 2007 Author Share Posted November 13, 2007 Ok, I finally have an idea of what's going on. I've told HMRC that the purchase price was 44550 but in actual fact it wasn't, it was 44550 minus the 19%. Therefore the dealer is correct in his figure but the demand I've had from HMRC is wrong! How the hell do I amend this figure now that I've already declared it? Link to comment Share on other sites More sharing options...
KD Posted November 13, 2007 Share Posted November 13, 2007 you tell them you have made a mistake Link to comment Share on other sites More sharing options...
KD Posted November 13, 2007 Share Posted November 13, 2007 Jackal - 2007-11-13 9:50 PM So HMRC are wrong then? no you are Link to comment Share on other sites More sharing options...
Jackal Posted November 13, 2007 Author Share Posted November 13, 2007 Thanks K+D. I'll just have to give 'em a ring and get some form of invoice from the dealer stipulating the net price and not the price that I paid. I hope they will accept the new figure :'( Link to comment Share on other sites More sharing options...
KD Posted November 13, 2007 Share Posted November 13, 2007 no problems good luck i cannot imagine your the first Link to comment Share on other sites More sharing options...
BGD Posted November 13, 2007 Share Posted November 13, 2007 Jackal - 2007-11-13 8:51 PM I don't know whether anyone else has experienced this but we recently imported a new van from Germany and paid the German VAT at a rate of 19% on 44550 EUR. The dealer mentioned in one of his emails and put on the final contract that this amounted to 7009.25 EUR. When we did the sums we found that 19% of that figure is actually 8464.50 EUR Given that I have paid 19% German VAT and only 17.5% UK VAT we were expecting to receive back more than we actually paid out, save the vagaries of the exchange rates at the times of the transactions. Does anyone know if VAT in Germany is computed differently to the UK? The figure he gave us seems to represent only 15.7%. Is he mistaken, on the fiddle or is there a reasonable explanation. The shortfall represents a loss of over £550! Hi Jackal - Sorry but it's not a shortfall, you've wrongly calculated the VAT due because VAT is a percentage of your NET (ie, total price before VAT) purchase price. By your dividing the TOTAL price (including VAT) by 19%, essentially you are adding Vat to Vat, which is wrong. To get back to a net price (ie to remove the VAT element) from a price which includes VAT at the German rate of 19%, you need to divide the gross (including Vat) price by 6.263 So, 44550 divided by 6.263 = 7113. Thus the VAT element in the total price you paid in Germany was €7113, take that amount away from your gross payment of €44550 and the net price (before Vat was added at 19%) was €37437. To prove it to yourself, multiply your "before Vat" payment of 37437 by 19%, and you end up with your "Including 19% Vat" payment of €44550. Now you know that your "before Vat" total payment was €37437, you can calculate what the VAT on that would have been if it had been charged at the UK rate of 17.5%: 37437 x 17.5% = €6552. So the difference in Vat between 19% and 17.5% on your net purchase price of €37437 is: €7113 - €6552 = €561. Hope this helps to fathom it out. Cheers, Bruce. Link to comment Share on other sites More sharing options...
Jackal Posted November 13, 2007 Author Share Posted November 13, 2007 Cheers Bruce, The trouble is I've declared the gross purchase price as opposed to the net price and HMRC have sent me a whopping bill based on the gross and not the net. Hopefully, the dealer will send me an invoice with the net price clearly marked and I can send this to HMRC. But when you're asked for the purchase price and that is what is written on the original invoice... Link to comment Share on other sites More sharing options...
Derek Uzzell Posted November 14, 2007 Share Posted November 14, 2007 Looking through my own records I notice that the German dealer from whom I bought my Hobby motorhome gave me two different-format invoices. One defined the net ex-VAT price of the vehicle (this is the invoice I submitted to HMRC who calculated the UK VAT due based on the net price). The other invoice detailed the full price of the motorhome as paid by me to the German dealer and specified the amount of German VAT I had paid and would later reclaim. This procedure simplifies matters for 'foreign' dealer, HMRC and UK motorhome buyer. Link to comment Share on other sites More sharing options...
Guest Tracker Posted November 14, 2007 Share Posted November 14, 2007 Having been VAT registered for many years I can say with some certainty that HMRC are generally a very reasonable crowd. They only ever want what the law dictates they are entitled to and whenever I made a mistake I just phoned them and followed it up with a confirmatory letter enclosing proof of my error and the cock up was corrected. This applied even when they were wrong - and yes it does happen! They only become nasty if they think you are on the fiddle or trying to evade tax by being over smart. Put simply, if 117.5 (or 119.0) is the total including vat (regardless of currency) at a vat rate of 17.5% (or 19%) you simply divide by 117.5 (or 119) and multiply by 100 to find the nett figure. Then subtract the nett from the gross to find the actual vat paid or due. Link to comment Share on other sites More sharing options...
BGD Posted November 14, 2007 Share Posted November 14, 2007 Jackal - 2007-11-13 10:40 PM Cheers Bruce, The trouble is I've declared the gross purchase price as opposed to the net price and HMRC have sent me a whopping bill based on the gross and not the net. Hopefully, the dealer will send me an invoice with the net price clearly marked and I can send this to HMRC. But when you're asked for the purchase price and that is what is written on the original invoice... My guess would be just give the UK Vat people a call ASAP and explain the error - as others have said, they should be OK about correcting the numbers, as they must get this sort of thing regularly. Also it would be a good idea to check through all the purchase paperwork again just to double-check that you haven't got a piece of paper showing the net purchase price (as other buyers have said that their dealer did supply this to them). If indeed you haven't, maybe give the German dealer a call and ask him to send one through to you so you can send a copy off to the UK Vat people. Good luck! Link to comment Share on other sites More sharing options...
KD Posted November 14, 2007 Share Posted November 14, 2007 BGD QUOTE " "Hi Jackal - Sorry but it's not a shortfall, you've wrongly calculated the VAT due because VAT is a percentage of your NET (ie, total price before VAT) purchase price. By your dividing the TOTAL price (including VAT) by 19%, essentially you are adding Vat to Vat, which is wrong. To get back to a net price (ie to remove the VAT element) from a price which includes VAT at the German rate of 19%, you need to divide the gross (including Vat) price by 6.263 So, 44550 divided by 6.263 = 7113. Thus the VAT element in the total price you paid in Germany was €7113, take that amount away from your gross payment of €44550 and the net price (before Vat was added at 19%) was €37437. To prove it to yourself, multiply your "before Vat" payment of 37437 by 19%, and you end up with your "Including 19% Vat" payment of €44550. Now you know that your "before Vat" total payment was €37437, you can calculate what the VAT on that would have been if it had been charged at the UK rate of 17.5%: 37437 x 17.5% = €6552. So the difference in Vat between 19% and 17.5% on your net purchase price of €37437 is: €7113 - €6552 = €561. Hope this helps to fathom it out. Cheers, Bruce." kind off just repeated what i had said there bruce mate Link to comment Share on other sites More sharing options...
BGD Posted November 14, 2007 Share Posted November 14, 2007 Hi Dean - Yes, kind of. Your earlier post was absolutely correct, but from Jackal's subsequent replies I don't think he quite understood all the maths from the way you wrote it.....my post was simply attempting to explain the necessary calculations in a stage-by-stage way so that someone who is not used to gross-to-net Vat calculations could follow them through. Cheers, Bruce. Link to comment Share on other sites More sharing options...
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