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HMRC internal manual

VAT Registration

Basic principles of registration: disposals of capital assets

The VAT Act 1994 Schedule 1 paragraph 1(7) provides that, in determining a liability to register or eligibility to deregister, traders should exclude from their taxable turnover the value of supplies of capital assets (see VATREG02650) used by them in their business.

Exceptions to this rule are:

  • where a business makes relevant supplies of capital assets in the UK (as defined in VAT Act 1994, Schedule 3A), it must register and account for VAT. You will find further guidance on this in VATREG37000 
  • the supply of a capital asset that is an interest in, right over, or licence to occupy land which is taxable other than at zero rate must be included in the turnover.

Please note that the disposal of stock and capital assets to a person who is acquiring a business as a going concern is, in certain circumstances, not a taxable supply. For further guidance see VTOGC. (External users can access this manual at