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A client buys and sells buses and incorporated his business some years ago after having previously operated as a sole trader. The sole trader business owned a vintage bus which it transferred to the company with a value of £25 000. It is now being sold for £20 000 to a private buyer. The client cannot remember how much he paid for the bus and whether he paid VAT when he bought it in 2009 (he thinks not). He only keeps his business records for six years.
Can the company ignore VAT because it is a secondhand vehicle being sold at a £5 000 loss so no margin tax is due? If this is incorrect how should the company deal with VAT on the sale? It seems wrong to charge 20% VAT although the reality is that the sale will be for £20 000 including VAT...
