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Sale of television zero sets involving part exchange.
A client sells televisions and other zero electronic equipment as a high street retailer. He gives a £100 trade-in for a customer’s old TV irrespective of its condition. So if a TV retails at £800 the customer will pay £700 in cash and give my client his old television to complete the deal. I advised my client that output tax was payable on only £700 in this situation. But an HMRC officer has said that because it is part exchange there are two separate transactions and output tax is due on the higher figure namely the £800. He is seeking to raise an assessment going back four years and also charge interest. What do readers think?
Query 19 204– Sharpe Man
Reply by Gardener
Determine the and economic reality of the transaction
VAT is charged on the full value of the consideration received for a supply whether...
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