How to Change the VAT Status of a Stock Vehicle between Margin and Qualifying

Changing the VAT status of a stock vehicle in Navigator is an important process that ensures VAT is calculated and reported correctly based on how the vehicle is sold. Users may need to amend the VAT status if it was initially set incorrectly or if there has been a change in the sale strategy (e.g., switching between a Qualifying sale and a Margin Scheme sale).

Getting the VAT status right is essential for:

• Ensuring accurate VAT returns,

• Avoiding compliance issues with HMRC, and

• Maintaining correct profit margin and invoicing calculations.

This update is made through the Purchase Status tab of the vehicle's stock record. However, several system rules can restrict your ability to make changes.

? Key Restrictions to Be Aware Of

Before attempting to change the VAT status, check that none of the following conditions apply. Any of these will lock the VAT status field, preventing changes:

• ❌ The stock record has been invoiced (a sales invoice has been issued).

• ❌ The vehicle has been adopted into the accounts.

• ❌ Costs have been posted against the vehicle.

• ❌ A Sales Order has been raised on the vehicle.

If any of these actions have occurred, the VAT status field will be locked, and the system will not permit further edits. You will need to reverse these first.

✅ Step-by-Step Guide to Change the VAT Status

1️⃣ Open the Vehicle Stock Record

• Search for and select the relevant vehicle stock record.

• Click into the Purchase Status tab.

2️⃣ Verify Editability

• Ensure that:

  • No sales invoice has been issued,

  • The stock is not adopted,

  • No cost postings have been made, and

  • There is no Sales Order attached to the vehicle.

⚠️ If any of the above conditions are present, the VAT status cannot be changed. You would need to reverse those actions (e.g., credit the invoice or cancel the sales order) before continuing.

3️⃣ Amend the VAT Status

• In the VAT Status dropdown, select the correct option:

  • Qualifying – VAT is applied at the standard rate (typically 20%) on the full sale price.

  • Margin – VAT is calculated only on the profit margin, in line with the Margin Scheme rules.

4️⃣ Save and Confirm

• After selecting the appropriate status, ensure changes are saved.

• The system will update the VAT calculations based on your selection.

? When to Use Each VAT Status