Q Could you clarify the position in regard to VAT chargeable
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on disposal of secondhand vehicles? From time to time, we sell off our commercial vehicles but I am under the impression that VAT is payable only on the deference between the buying and selling price. Sometimes the selling price is only the scrap value. Is it necessary to pay VAT on this?
AYour company is undoubtedly a taxable organization which claimed back, from the Customs and Excise Department, the VAT raised on the selling price by the original supplier. In that case VAT has, in practice, not been paid on the vehicle. When you sell it, you should raise VAT at 10 per cent of the selling price and apply to the purchaser a tax invoice showing the VAT raised.
If he, too, is a taxable person, he can recover it in his turn, and in effect no VAif will have been paid yet again.
On the other hand, if he is not a taxable person he will have to pay the VAT — which he does, through you, when he buys the vehicle.