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JinKesef

Do coin/silver dealers have to pay VAT?

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I was wondering if dealers or store owners have to pay VAT for silver? I had a thought about whether TSF members (US and UK) could become a non-profit distributor of silver so the payable  VAT would be reduced. 

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VAT is always neutral for a VAT registered trader in that they pay over what they have received to, and reclaim what they have had to pay from, HMRC. The end consumer is always the one who bears the cost of VAT so even if a (VAT registered) non profit entity bought the silver and reclaimed the VAT, it would then have to charge VAT to the people it was distributing to. 

Edited by Finbinfin

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1 hour ago, RoughDog said:

What if a VAT registered company purchased pre owned silver from a UK individual?

I asked my accountant about this in the past but she couldn't give me a clear answer. In theory if you are a VAT registered company paying UK VAT then you should be able to claim back VAT on silver assuming it's considered a business expense. Perhaps you could only do this if you used the silver as part of your business such as a jewellery maker.

If you're purchasing pre-owned from a private individual it's probably best to purchase personally and not via a company. As the individual would not need to charge VAT.

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You cannot charge or reclaim VAT unless you are VAT registered.

If you are VAT registered you are in effect a registered tax collector.

It does not matter whether you are non-profit or what you are, if you are VAT registered you collect this tax on behalf of HMRC.

If you buy something from the private individual there is no VAT in the price but where the item is being bought second hand there is a recognition that the VAT has already been paid by the seller. For this reason when such items are sold the margin scheme can be used. Here the retailer who buys second hand goods from the public only charges VAT on his profit.

Edited by sixgun

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12 minutes ago, JinKesef said:

So is it easy to become a VAT registered company? 

Well if you have a company you could register. If you are selling goods to the public it usually works against you.

People are interested in the price they pay. So in general VAT registration means money that would have gone into the company's coffers goes to HMRC.

If you are selling at £100 in a competitive market and then register you can't just add 20% onto the price and stay competitive.

Let's say your input cost was £50 - so £41.66 + £8.33 VAT. You then sell at £100 so £833.33 + £16.66 VAT.

Now you can reclaim that £8.33 so you actually give HMRC £8.33. So you get to keep £91.66.

Now if you can't flex your price up, registration means you are £8.33 worse off as the seller.

Value Added Tax is just another tax and doesn't help the retailer or the consumer.

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5 minutes ago, sixgun said:

Well if you have a company you could register. If you are selling goods to the public it usually works against you.

People are interested in the price they pay. So in general VAT registration means money that would have gone into the company's coffers goes to HMRC.

If you are selling at £100 in a competitive market and then register you can't just add 20% onto the price and stay competitive.

Let's say your input cost was £50 - so £41.66 + £8.33 VAT. You then sell at £100 so £833.33 + £16.66 VAT.

Now you can reclaim that £8.33 so you actually give HMRC £8.33. So you get to keep £91.66.

Now if you can't flex your price up, registration means you are £8.33 worse off as the seller.

Value Added Tax is just another tax and doesn't help the retailer or the consumer.

I understand that but couldn’t UK stackers register themsevles as VAT registered companies and just reclaim the VAT that they paid when buying silver? 

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Just now, JinKesef said:

I understand that but couldn’t UK stackers register themsevles as VAT registered companies and just reclaim the VAT that they paid when buying silver? 

Setting up a company and doing the paperwork has costs  - it doesn't have to be a lot if you did you own accounts but there are costs.

You claim back VAT when you sell the item which you are adding VAT to. So it gets given with one hand and taken away with the other.

You can't buy an item, keep it and claim back VAT. It doesn't work like that. You have to sell the item on to reclaim VAT.

The only time it is a reclaim with no payment is when you export the item. So if you bought silver, paid the VAT and then exported it outside the EU. You would not charge VAT on that but you can reclaim the VAT. 

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You can make a company for less than $100 and you don’t have to file for taxes if your company doesn’t make a profit.

Wow! That’s insane, I never knew you can’t reclaim the VAT until you sell it off. 

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