A car dealer diverts a car from stock-in-trade for use in their taxi business in May 2021
Exempt business use
|Cost of vehicle VAT inclusive
|VAT element included at 23%
|VAT credit claimed on purchase as stock
The car dealer would normally be entitled to a VAT deduction. However, the car dealer must now account for the VAT on the diversion of the goods to an exempt use. For example their taxi business.
The car dealer is obliged to account for VAT on the self-supply. This process is completed by increasing their VAT on sales (T1) by €5,290 in the May to June 2021 VAT return.