VATREG02600 | Basic principles of registration: disposals of capital assets

Paragraph 1(7) of Schedule 1 to the VAT Act 1994 provides that, when determining taxable turnover, the value of supplies of capital assets used in the course of the business (for example, buildings, equipment or vehicles) must be disregarded (see VATREG02650).

However, under paragraph 1(8) of Schedule 1, this disregard does not apply to a supply of a capital asset consisting of an interest in, right over, or licence to occupy land where that supply is taxable other than at the zero rate; such supplies must be included in taxable turnover.

• It should be noted that a liability to register for VAT may arise under Schedule 3A where a business makes ‘relevant supplies’ of capital assets in the UK. A ‘relevant supply’ is defined in paragraph 9 of Schedule 3A (see VATREG39000)

Please note that the disposal of stock and capital assets to a person who is acquiring a business as a going concern is, in certain circumstances, not a taxable supply. For further guidance see VTOGC. (External users can access this manual at http://www.hmrc.gov.uk/manuals/vtogcmanual/index.htm).