VATGPB4730 | Section 33 bodies: cars: disposals

The general principle is that VAT is only due on the disposal of an asset if VAT was recoverable on its purchase. Recoverable VAT includes tax claimed under section 33.

Consequently, the disposal of a car by a section 33 body is subject to VAT at the standard rate where the VAT on its purchase was recovered under section 33(1) (see VATGPB4120). If no VAT was recoverable the disposal is an exempt supply under Group 14 of Schedule 9 to the VAT Act 1994.

For cars sold at auction the consideration is the amount paid by the purchaser, not the net amount received by the body after the deduction of auctioneer’s commission. The auctioneer’s commission is an expense that should be shown on the inputs side of the VAT account.