Andrew Needham looks at the VAT implications of disposing of a capital goods scheme item.
The capital good scheme (CGS) is designed to adjust the amount of VAT claimed on a capital item during the ‘life’ of an asset to reflect its taxable business use.
The CGS applies to certain commercial property, some computer hardware and certain ships, boats and aircraft, and adjusts for taxable/exempt and non-business use of the capital asset.
For most businesses the real impact of the CGS applies to commercial property over £250,000 on which VAT has been recovered. The adjustment period for property is ten years, and is five years for other items.
Disposing of a capital item
If a business sells a capital item before the end of the
