Transactions treated as supplies
V3.261 Assets held at deregistration
When a person ceases to be a taxable person, goods (including land) then forming part of the assets of his business are deemed to be supplied by him1 so as to give rise to a charge to tax. There are two relieving provisions. The first exempts specific goods from the deemed supply and the second exempts all goods in specified circumstances.
It should be noted that services (for example a licence to sell computer software) held at the time of deregistration are excluded from the charge2.
Exemptions for specific goods
Since the apparent intention of the deemed supply is to claw back input tax credited when the goods were originally obtained, it would be inequitable for persons to account for VAT on goods which did not give rise to an input tax credit when they were acquired. Two situations can be distinguished.
First, if the goods were purchased or imported before 1 April 1973 they may have been charged to purchase tax or excise duty, but would not have been charged to VAT. If relief was given under FA 1973, s 4 (now repealed), so that the purchase tax or excise duty borne was treated as input tax, the goods are deemed to be supplied when the trader ceases to be a taxable person. If no such relief was given, the goods are not deemed to be supplied when the trader ceases to be a taxable person3.
Secondly, if the goods were purchased, acquired
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