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VAT on sale of company owned RIB

VAT on sale of company owned RIB

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A Ltd Co client in the marine sector has sold a rigid inflatable boat to another marine based company for £17k.

The boat was initially purchased in 2011 for £18k as a used boat with 'VAT paid'. This was before my time and I have not seen the records to confirm the VAT treatment but I am told that no VAT was charged/claimed as this was purchased from a private individual.

A Group structure was implemented some time later (again, before my time) and this boat was sold to the holding company along with several other assets for £1 so the second hand margin scheme does not appear to help (if it was ever an option).

What is the VAT position on this sale?

My client thinks that the 'VAT paid' status transfers to the purchasing company so no VAT should be charged on this sale.

A8 at the following link reads as though VAT should be charged:

https://www.rya.org.uk/sitecollectiondocuments/legal/Web%20Documents/Leg...

Thanks in advance for your input.

 

 

Replies (4)

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By WhichTyler
01st Jun 2020 22:03

I think that your client is wrong. I particularly like the concept of 'VAT paid' but 'no VAT was charged'. There is always vat on the sale by VAT registered business, whether for a vat inclusive or exclusive price. The only question is whether all of it has to be paid over or whether the margin scheme comes into play. You could argue margin scheme as it is a traceable item, but not that no VAT at all is payable.

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Replying to WhichTyler:
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By CWservices6064
02nd Jun 2020 09:01

Thanks for the feedback.

My client's company purchased the boat from a private individual so no VAT was claimed at this point. He has a paper trail going back to the original purchase of the boat from a UK supplier from new showing VAT paid to prove 'VAT Paid' status. It was this 'VAT paid' status that was confusing him and he is now in agreement that VAT should apply on the sale from his company.

I assume that this would usually be dealt with under the margin scheme with no or little profit.

The transfer of assets to the holding company for £1 is the remaining sticking point. Are you suggesting that this value can be ignored in favour of the original cost to the wholly owned subsidiary? This would be the ideal solution!

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Psycho
By Wilson Philips
01st Jun 2020 22:41

Is there a VAT group?

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Replying to Wilson Philips:
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By CWservices6064
01st Jun 2020 23:02

No VAT group.

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