Add VAT Margin Tax scheme for Trade In sales
In the UK and other EU countries, we pay full VAT on our repairs and sales, but on Trade Ins we only need to pay VAT on the margin.
The VAT should be calculated on the difference between the selling price and buying cost, NOT including repair costs.
As RepairDesk does not allow this type of VAT calculation, the reports are useless to any VAT registered business who is in the used device market as it will calculate the VAT incorrectly.
This also means I will have a load of extra work to by calculating it myself on a spreadsheet.
Hello everyone, we have launched the VAT margin scheme in RepairDesk.
Using a margin scheme will reduce the tax you have to pay on your sales of trade-in devices or specific product categories.
You can learn more about this to setup and use this feature from the following knowledgebase article:-
Now that this is planned can I add one other suggestion for it: Global Accounting. It works in a similar way but rather than working out the VAT on each individual item we just work out the difference in Purchases and Sales in the VAT period, NOT including the cost of parts used for repair.
To implement Global Accounting would be a simple report and would make the VAT return so much easier and less time consuming.
Example: 01/01/2020 to 31/03/2020
Purchases: £10,000 of Trade In devices
Sales: £17,500 of Trade In devices
VAT: sales minus purchases divided by 6. £17,500 - £10,000 = £7,500 / 6 = £1,250 VAT Payable
If anyone migrates from VAT Margin to Global Accounting the initial period takes the total value of all trade in stock on hand and adds it to all purchases, so the initial month might be negative for VAT owed.
Currently the reports do not work correctly for this as it brings in extra phones for some reason. I have to use the spreadsheet to do it.
Also on reports the total values only show the totals per page rather than the totals for them all.
This is a better way of doing the VAT as it can mean less VAT is paid - you cant reclaim VAT on items sold at a loss on VAT Margin, but on Global Accounting it is offset.
Hi Usman, for calculating the VAT due you subtract the purchase price of the item from the sales price and pay 20% on that amount. The cost of parts is not then into consideration for VAT purposes, but it is for profit calculation.
I have since moved to the Global Accounting scheme were I just pay VAT on the difference between the total trade in purchases and total trade in sales in a period - it has made things much easier.
@kevin: If you used a part to repair pre-owned phone does that goes toward your cost?