My partner and I run our own used car sales business and have recently hit the VAT threshold.
I have registered for VAT and will be using the margin scheme on the MTD 'making tax digital' HMRC software.
Today we have been calculating our margin scheme VAT on each individual sales receipts which seems to have worked BUT only where deposit are not involved.
We often receive bank transfer deposits to hold a car followed by the final payment a few days later, meaning we then have two separate sales receipts and bank feed transactions for the same car. This has been fine up until now but now that VAT is involved I am clueless.
I thought it would be best to not add VAT to the deposit receipt but that is where my knowledge it ends. I thought about adding the deposit figure into a new line in the Sales Receipt but this doesn't work either as it affects my sales records and also wouldn't match my banking feed.
For e.g. I have two bank transfers. Deposit is £300 and Sale is £2000. If I create a Sales Receipt for £2300 to correctly work out my VAT margin it would incorrectly show as +300 on my sales and also not match the bank transfer on my bank feed.
Basically I just want to be able to work out the VAT margin scheme where a deposit is concerned.
I'm so sorry if I haven't explained this very well, it may well be a simple fix which I am unaware of and fingers crossed.