Vintage Tractors

Vintage Tractors

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Good Morning Everyone,

A Client has asked if he is obliged to charge VAT on the sale of a vintage tractor which was manufactured in 1960. The tractor was willed to him by his late father in 1991 and my client did not pay any VAT on it then.  He restored the tractor over the years and would drive it in Vintage parades. 

My client operates a small engineering business for which he is VAT registered, but the tractor is not used at all in this business. I would have thought that no VAT was due, but the VAT helpline have told him that VAT is due as he is making a taxable supply.

Any thoughts anyone.

Thanks in advance.

Replies (2)

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By DMGbus
06th Jul 2011 10:58

(1) Same entity? (2) Input tax claim

Firstly is the tractor owned by the same VAT registered entity that runs the business?  If no, then NO VAT due, read no further.   If yes, then see next paragraph.

If the tractor is owned and then sold by a VAT registered business then apart from being required to account for output VAT on the sale price (be it by margin scheme or on full price) there is an opportunity to recover input tax incurred - presumably not recovered in the past therefore go back four years on this input tax claim.

Next - the output tax.  If the tractor was bought VAT-free as a used tractor then look at mitigatiing the output tax cost by applying the margin scheme.

 

 

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By pawncob
06th Jul 2011 17:26

Not Business
It's not a business asset. It was left to him personally and any sale will be outside the scope of VAT.
If it was a painting you wouldn't consider treating it as within the margin scheme (or the scope of VAT) so why would you when it's a tractor. And you don't qualify under the margin scheme anyway.
http://www.hmrc.gov.uk/vat/start/schemes/margin.htm

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