VBNB74200 - Legal history: cases about disposal of assets
Please note that the following material is not a full summary of the case - it merely highlights the principle referred to in the appropriate section of this manual.
Bakcsi 2002 STC 802
»Ê¹ÚÌåÓýapp taxpayer bought a car from a private individual and used it for both business and private purposes. »Ê¹ÚÌåÓýapp taxpayer subsequently sold the car. »Ê¹ÚÌåÓýapp Court ruled that where a taxable person uses a capital item:
- for both business and private purposes; and
- has incorporated that item wholly into their business assets
the sale of that item is wholly subject to VAT.
»Ê¹ÚÌåÓýapp fact that the item was bought second-hand from a private individual and therefore the taxpayer could not recover input tax on its purchase was irrelevant. »Ê¹ÚÌåÓýapp Court observed that a taxable person who acquires a capital item for mixed purposes may keep it entirely within their private assets and thereby exclude it entirely from the VAT system.