Client company has a classic car used by a director for some years. Now planning to sell the car & proceeds likely to exceed original cost by c.£12K. No input vat claimed on original purchase when car was bought secondhand from a garage - but does client have to pay vat on the sale using the second-hand margin scheme.. Also is the profit taxable - or do we just pay balancing charge in the normal way - not sure how the new Annual Investment allowance interacts with sales of assets.
Teresa
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VAT calculated on profit margin
Where the company sells a car at a profit, then output tax is due on the profit margin. For a one-off sale, there is no requirement to keep a full margin scheme stock book. The company will, however, need to be able to demonstrate the purchase and sales prices.