Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

Application of VAT second-hand margin scheme to repossessed vehicles

06 March 2020
Issue: 4735 / Categories: Tax cases
Volkswagen Financial Services (UK) Ltd v CRC, Upper Tribunal (Tax and Chancery Chamber), 27 February 2020

Volkswagen Financial Services (UK) Ltd (VWFS) bought vehicles from a dealer to sell to customers under finance agreements. If an agreement terminated before completion VWFS repossessed the vehicle and resold it.

A dispute arose as to the VAT treatment of the resales. VWFS argued the second-hand margin scheme applied so that VAT was charged only on the difference between the price paid by the dealer and that received on the resale. The First-tier Tribunal agreed with HMRC that the second-hand margin scheme did not apply to resales. The taxpayer appealed.

The issue before the Upper Tribunal was whether there was a supply of goods by customers to VWFS when the vehicles were repossessed. Only if there were could the resale fall within the second-hand margin scheme.

In brief VWFS said there was a supply of goods under the Principal VAT Directive Art 14(1) which describes this as ‘the transfer of...

If you or your firm subscribes to, please click the login box below:

If you are not a subscriber but are a registered user or have a free trial, please enter your details in the following boxes:

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.

Please reach out to customer services at +44 (0) 330 161 1234 or '' for further assistance.

back to top icon