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VAT Status of Salvage Vehicles?

What is the correct way to invoice the salvage element of an insurance loss?

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I'm just wondering the correct way in which to account for the salvage value of a vehicle in our software.

The asset/vehicle in question was declared a total loss and we recieved around 75% of it's value directly from the insurance company with the further 25% being sent directly from the salvage company.

The element from the salvage company, is this subject to VAT? Or does this fall under the same status as VAT Exempt as the rest of the vehicle value does?



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By lionofludesch
13th Dec 2021 18:54

Yes, it's probably liable to VAT. Hard to be sure when you don't say what the asset actually is. You aren't the first to use the word "vehicle" in this context, overlooking the huge difference in treatment between a car and a commercial vehicle.

The insurance proceeds aren't exempt. They're outside the scope. There is no supply to the insurance company - it is merely compensating you for your loss.

There is, on the other hand, a supply to the fellas who bought your damaged asset - a supply of a damaged asset.

The above pre-supposes that the supply of the asset is standard rated and, in particular, is not a car, in which case, all bets would be off.

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Replying to lionofludesch:
By Paul Crowley
13th Dec 2021 19:10

Vehicle just so unhelpful
A car would be treated exactly the same as it the car had been sold secondhand
The same with a van as in treat it the same as if the van was sold second hand
Van might have VAT on it
Car probably not, assuming not a taxi or any other special category
So really need to look at what happened when vehicle was bought

Adding cars to the user description does of course lead us in the direction of a car dealer

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