Asset disposal where company is subject to partial exemption
Have a general query from a client and not enough time to research whilst filing all those nasty late SA returns!!
My client has significant VAT partial exemption (a golf club).
They are part ex'ing and replacing a significant piece of plant - am I correct in assuming that the allowable % recovery on the original plant (approx 20%) would then mean the same % was the repayable vat on the disposal?
eg original cost £50k plus vat £10k, but input claim restricted via partial exemption to 20% (ie £2k). Now being disposed for £16k to finance company therefore being
£13,333 net and vat of £2,667 vat. Would have imagined the output VAT on disposal would be the same as the allowable % when originally purchased - otherwise they only recovered £2,000 when purchased and then have to pay £2,667 on the disposal!!
Appreciate there may be a simple answer to this and many thanks in advance!