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HMRC internal manual

VAT Margin Schemes

Specific circumstances: Part-exchange goods

Guidance on the treatment of part-exchange goods can be found in V1-12 Valuation, which also covers inflation of part-exchange values to secure credit from finance companies (referred to in VATMARG13250). 

Where goods are accepted on the basis of a minimum part exchange value, the full amount allowed is considered to be the purchase price of the part exchange goods. The selling price of goods bought by the customer is the full amount charged.

If the part-exchange goods are eligible margin scheme goods, their purchase price is the full amount allowed for them.

The trader must obtain a purchase invoice for goods bought from a VAT-registered dealer. If he buys from a private person or an unregistered dealer, he may include details of the part-exchange items on the sales invoice provided all the requirements of Notice 718The VAT Margin Scheme and global accounting.