Selling a van

Regshoe

motorguy wrote: »

Rather than criticise semantics, why not show us where it says you have to create another non vat registered entity?

That is not what he said, Zygurat's first post could perhaps have been slightly clearer, but he is correct to state that when a business de-registers from VAT the treatment of assets where VAT has previously recovered is such that the business in effect "sells" itself the asset at market value (subject to a threshold). The important point being that this is output VAT added to the final return, rather than say a reduction in input VAT.

This is similar in practice to what happens with situations like fuel scale charges, business proprietors taking stock for personal use, self assessed VAT on "imported" services and other similar events. Though there may be no legal change in ownership it is still treated as a supply to oneself (a virtual sale if you like).