- This topic has 1 reply, 2 voices, and was last updated 7 years ago by
.
- Posts
Dear tuitor,
Could you please explain the impact of VAT on Disposals?
If the business is Vat registered , how the disposal proceeds will become subject to vat?
As per my understanding we should take in to account for capital allowance only the net sales proceeds ( vat excluding value) because the vat charged on disposal will be subject to input vat claim to the party who purchased from this business . Is it correct sir?When an asset is purchased that qualifies for capital allowances – for example, a machine costing 10,000 plus VAT is purchased, then 10,000 will go to the CA computation and 2,000 input VAT will go to the VAT return (except for cars where the input VAT is irrecoverable and therefore 12,000 will go to the CA computation)
When the asset is sold then the net proceeds as you say will go to the CA computation and any VAT on the sale will go to the VAT return as output VAT
- You must be logged in to reply to this topic.