Scrap: ‘Nice little earner!’
May 28th, 2009 by Richard Aucock
VAT experts have revealed the Government is to profit big from the new car scrap sales incentive scheme.
Michelle Malone from VAT accountants ASE revealed that the Government’s £1000 contribution is actually only £870!
This is because the scrappage subsidies are considered part of the invoice settlement.
In other words, the car’s selling price is unchanged.
If, however, the subsidy had been a ‘discount’, the actual selling price would have been reduced by £2000 – and the VAT collected by the Government reduced by £260!
All this, coupled with a boost in car sales AND extra corporation tax on any profits boost, means Malone reckons the scheme ‘should prove to be a nice little earner for the Treasury.’
Difficulties come when customers are VAT registered. Dealers will need to be careful here, particularly as HMRC is already targeting car dealers, says Malone…
Ford to start scrap scheme deliveries
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May 29th, 2009 at 9:35 am
This e-magazine, and others like it, is ideal as a time-saving ‘speed-read’ for busy people in the industry. That is very helpful. But surely there’s nobody in the franchised trade in the country that hasn’t realised that the government contribution is £870 + VAT. Next we’ll be told by an industry expert that the government is ahead in the VAT stakes every time we sell a car for £6,667 inc VAT! We know all of this. More wheat please, less chaff.