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Readers forum: Car resale

03 November 2020
Issue: 4767 / Categories: Forum & Feedback
VAT considerations on sale of business cars.

I act for many builder clients and am worried that I have been giving incorrect advice on VAT for many years.

One of the replies to query 19 626 (Taxation 1 October 2020 page 27) about the sale of a secondhand bus commented that a condition of the margin scheme for vehicle sales is that they must have ‘been bought for resale’.

I have always told my builder clients that if they buy a car to use in their business and have not been charged VAT on the purchase there is no output tax to pay when they sell it as long as they do not make a profit which of course they never do because of depreciation. Is this advice not correct?

To extend my question if a client buys a new car and does not claim input tax ...

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