VAT on ULEZ scrappage income?

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My client, a small VAT registered building company has scrapped a company van under the scrappage scheme. Do I declare output VAT on the income, or is it a grant outside the scope? A link to HMRC / TFL guidance would be great. Thank you.

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By Truthsayer
22nd Sep 2023 13:55

It's outside the scope of VAT, but it counts as a disposal for capital allowance purposes.

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Trevor Steel
By Trevor Steel
23rd Sep 2023 00:43

Although VAT isn't specifically mentioned, the explanation of the process here is useful: https://tfl.gov.uk/modes/driving/ultra-low-emission-zone/scrappage-schem...

The vehicle owner takes the vehicle to an Authorised Treatment Facility (ATF), they scrap the vehicle, and give the owner a certificate of destruction. The ATF may also make a payment to the vehicle owner, based on the true scrap value. The certificate is then submitted to TFL, who pay the scrappage grant.

The money from TFL is outside the scope of VAT, as the vehicle owner hasn't made any supply of goods or services to them.

However, any scrap value monies received from the ATF will be subject to VAT, because they are payment for the supply of the van to the ATF.

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