NV1 - Liability Issues

The NV1 - Liability Issues report is designed to identify new vehicles where the VAT accounted for on the sale is either very low or nil. These scenarios often arise when vehicles are supplied for export or adapted for sale directly to disabled individuals. The report helps ensure compliance with VAT regulations and the correct application of zero-rating.

Associated Risks

1. Incorrect Zero-Rating:

   • Vehicles supplied on Hire Purchase (HP) are sold to the finance company and are not eligible for zero-rating.
   • Action: Verify that VAT has been applied correctly for HP transactions.

2. Exported Vehicles:

   • Ensure there is valid evidence to confirm the vehicle has been exported.
   • Action: Maintain proper documentation, including proof of export.

3. Adapted Vehicles for Disabled Persons:

   • For vehicles to qualify for zero-rating:
     • The vehicle must be specifically and permanently adapted for a disabled person.
     • A completed and signed certificate from the disabled person must be retained.
     • The vehicle must be for the personal use of the disabled individual.
   • Notes: Supplies to businesses, even for disabled employees, cannot be zero-rated.

Considerations

1. Inter-Company Transactions:

   • Vehicles supplied inter-company or transferred to demonstrator stock are also detailed in this report.
   • Action: Ensure these vehicles retain their qualifying status when ultimately sold.

2. Qualifying Status Maintenance:

   • Ensure proper handling of vehicles transferred between departments or stock categories (e.g., demonstrator stock) to avoid losing their VAT-qualifying status.

Scenarios Where This Report is Useful

• Verifying VAT treatment for vehicles sold as exports or adapted for disabled persons.
• Ensuring compliance with VAT rules for vehicles sold on Hire Purchase.
• Monitoring inter-company and demonstrator stock transfers to maintain qualifying status.

Key Notes

• Documentation: Always retain appropriate evidence for zero-rated sales, such as export proof or adaptation certificates.
• VAT Compliance: Be vigilant with vehicles supplied to finance companies or businesses to avoid incorrect zero-rating.
• Qualifying Status: Maintain vigilance over vehicles transferred inter-company or to demonstrator stock to ensure they are properly classified.