Guidance

VAT: lost, stolen, damaged or destroyed goods

How you should account for VAT on goods that are lost, stolen, damaged or destroyed.

• From: HM Revenue & Customs
• Published: 6 June 2009

Overview

When you lose goods because of things like losses in the post, theft or damage, you바카라 사이트檒l need to make sure you deal with the VAT correctly. In some cases, VAT will still be due on the goods but in other cases it won바카라 사이트檛.

The VAT treatment depends on whether or not you바카라 사이트檝e actually supplied the goods, what happened to them, who was responsible for them at the time and if you바카라 사이트檝e issued a VAT invoice. You also need to take into account any credit you바카라 사이트檝e given the customer.

Goods that have been lost

Sometimes you might sell goods to a customer, but they never receive them because they바카라 사이트檝e gone astray. This could happen, for example, if goods you send get lost in the post. The way you deal with the VAT on goods that get lost after you make a sale depends on the agreement between you and your customer (your contract). The VAT treatment depends on who바카라 사이트檚 responsible for losses - you or the customer. You may cover details like this in your standard customer terms and conditions.

Customer is responsible for losses

If your customer is responsible for any losses before the goods are delivered, then VAT is due on the full amount of the sale. You should account for the VAT in the same way as you would for a normal sale.

You are responsible for losses

If you바카라 사이트檙e responsible for any losses before the goods are delivered, then the way you바카라 사이트檒l account for the VAT will depend on whether or not you바카라 사이트檝e issued a VAT invoice.

If you바카라 사이트檝e issued a VAT invoice to your customer, VAT is due on the amount you invoiced, less the value of any credit you바카라 사이트檝e given the customer. So if you give your customer a credit for the full amount they paid there won바카라 사이트檛 be any VAT due. Even if there바카라 사이트檚 no VAT due because you바카라 사이트檝e given your customer a full refund, you should still show details of all the transactions in your VAT records.

If you haven바카라 사이트檛 issued a VAT invoice to your customer then there바카라 사이트檚 no VAT due. This is because you haven바카라 사이트檛 supplied anything. You should make a note in your VAT records to explain that the goods were lost and that you haven바카라 사이트檛 issued a VAT invoice.

Goods that have been stolen

If goods are stolen from your premises there바카라 사이트檚 no VAT due on them as long as you haven바카라 사이트檛 already invoiced a customer for them. There바카라 사이트檚 no VAT due because you haven바카라 사이트檛 supplied anything.

Goods sold to a customer have been stolen

Sometimes goods might be stolen from your premises after you바카라 사이트檝e sold them to a customer. This may happen, for example, if you take delivery of something from a supplier to fulfill a customer order but it gets stolen before it바카라 사이트檚 collected. If your contract with the customer means that they바카라 사이트檙e responsible for the goods while they바카라 사이트檙e on your premises - perhaps because you바카라 사이트檝e completed the sale and you바카라 사이트檙e just storing them for the customer - then you바카라 사이트檝e supplied the goods and VAT is due on them.

If the customer isn바카라 사이트檛 responsible for the goods when they바카라 사이트檙e stolen, then if you:

• have issued a VAT invoice to your customer VAT is due on the amount you invoiced.
• haven바카라 사이트檛 issued a VAT invoice there바카라 사이트檚 no VAT due - this is because you haven바카라 사이트檛 supplied anything

VAT retail schemes

If you use one of the VAT retail schemes and you바카라 사이트檝e had goods stolen this might involve making adjustments to your scheme calculations for VAT purposes. You바카라 사이트檒l need to check the information for either a direct calculation retail scheme or a point of sale retail scheme.

Goods lost because of fraud

To avoid paying VAT unnecessarily on goods that you lose because of fraud, you바카라 사이트檒l need to:

• report the incident to the police
• contact HM Revenue & Customs (HMRC) and give them details of the case

When you contact HMRC you may need to give full details of the fraud, including a crime or case reference number you바카라 사이트檝e been given by the police. So have as much information as possible to hand. HMRC will look at the case and advise you of what to do.

Goods that have been damaged or destroyed

Damaged goods that you sell on

From time to time something that you normally sell might get damaged. For example, a member of staff might drop something and scratch it.

You might decide to sell the damaged item at a discounted price as damaged goods or it might have some scrap value. If you do sell the damaged goods, VAT is due in the normal way on whatever you sell them for. They바카라 사이트檙e not second-hand goods, so you can바카라 사이트檛 include them in any second-hand margin scheme that you operate for VAT. If you get some money from your insurer to cover the damage, there바카라 사이트檚 no VAT due on the payment from them.

Goods destroyed so that they바카라 사이트檙e not saleable

Goods might be destroyed meaning that you can바카라 사이트檛 sell them at all. If this happens and you hand over the goods - or what바카라 사이트檚 left of them - to your insurer, there바카라 사이트檚 no VAT due. And there바카라 사이트檚 no VAT due on any money you receive from your insurer. HMRC will need to see evidence of your insurance claim, and details of any insurance payment, on their next inspection visit to your business.

Published 6 June 2009