Dealer profit, new bike price

[Carlsv8]

Gents, anyone work in a dealers or have knowledge of new bike costs ? My question is if a dealer pre-regs a bike, R.R.P. Of £10300 as a random figure, then sells it for £9000 does he make more profit than selling a brand new bike. The first 20% on a new purchase is tax which is obviously not paid on a 'second hand,  pre-reg' bike. This £2060 must be deductible from something or other. I am aware of dealer incentives for sales volume from the manufacturers. If this figure is 100% deductible then the dealer seems to be making £1000 more, minus O.T.R., DVLA costs etc.

[dentonlad]

Sales tax - i.e. VAT doesn't just disappear.

If a dealer has claimed VAT on the purchase of a bike from the manufacturer or importer he has to declare VAT on the full selling price.

So the new bike selling at 10,300 includes VAT of 1,766.67. The dealer may have bought the bike for 8,300 including VAT of 1,383.33. His profit is 1,616.67

If he pre-registers that bike it isn't automatically 'second hand' for VAT purposes. VAT must still be declared on the full selling price (because the dealer has claimed back the VAT he paid to the manufacturer or importer). If the bike is sold for 9,000 the VAT will be 1,500. The profit made by the dealer will be 583.33.

On second hand bikes bought as trade-ins there is (generally) no VAT charged by the seller. The dealer declares VAT on the profit margin he has made on the sale. So if you traded your bike in and got 4,000 the dealer sells it under the 'second hand margin scheme' for 5,000. His profit is 1,000 on which he must pay VAT of 166.67.

[Carlsv8]

Thanks Dentonlad, not how I initially assumed the system worked but now in the picture, power of the internet, brilliant
Cheers
Carl

[reasty]

Agreed. - many thanks for taking the time to explain