Part-exchange transactions - VAT implications

May 2015

N&M Walkingshaw Ltd

What is the value of a car sold by a dealer where the dealer offers on over-allowance on the customer part-ex vehicle?
The dealership contended the over-allowance constituted a discount against the value of new car, i.e. reducing the consideration for VAT purposes.

The Tribunal found that over-allowance was in respect of the part-ex vehicle.  No discount was offered on the vehicle sale and as such VAT was due on the agreed sale price.

Please do give us a call if you need to discuss any aspect of this or other cases concerning barter or exchange transactions.

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