VAT Treatment under Profit Margin Scheme -If Second Hand goods sold in Loss
If second hand goods fall under the catagory of Profit Margin scheme while on the scond sales, if we made loss instead of Profit.
Then VAT will be charged on the full price while VAT already charged on its first supply and it will be duplicated again. What is the treatment on it.
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I presume you question is if the good is sold at a loss then should you still be charging VAT. If all the conditions and requirements of the profit margin scheme is complied with along with the availability/retention of the required documentations, then there should not be a requirement to charge VAT if the second hand good is sold at a loss.
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I agree with Mr. Sajith, any goods sold in 'loss' under Profit Margin Scheme should not be subject to VAT. However, please ensure that there are sufficient documentary evidence to substantiate that the goods have been sold under Profit Margin Scheme. Where one is not able to substantiate the fact that goods are sold under Profit Margin Scheme, in such a case, VAT on full value of sales shall be recovered by FTA.
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We can classify this transaction as Out of scope in the VAT working and no need to disclose in the VAT Return?
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